The US Department of Justice's decision to back away from an investigation into Federal Reserve Chair Jerome Powell has potentially cleared the path for President Donald Trump's nominee, Kevin Warsh, to take the reins. Warsh, who has significant personal wealth, including investments in cryptocurrency, has been awaiting a final Senate vote after a recent confirmation hearing. Trump, who has criticized Powell for high interest rates, chose Warsh to address this issue. However, Senator Thom Tillis had previously stated he would block Warsh's confirmation as long as the DOJ investigated Powell over cost overruns in a Federal Reserve building project.
With the investigation now dropped, US Attorney Jeanine Pirro has asked the Fed's inspector general to investigate and issue a report. Following this news, betting odds on Warsh's confirmation before May 15 surged from 30% to over 80%. Pirro stated that she expects a comprehensive report and is confident it will resolve the questions that led to the investigation, but noted she would not hesitate to restart it if necessary. Trump's ability to appoint his own people to the Federal Reserve would grant him greater influence over US monetary policy and provide him with more allies on the Fed board, which makes decisions on financial policy, including crypto industry regulations.
Senator Elizabeth Warren dismissed the move, calling it an attempt to clear the path for Warsh's confirmation and noting the administration's ongoing pursuit of Fed Governor Lisa Cook in court. Warren stated that the Justice Department's announcement was an attempt to install Warsh as Fed chair, while threatening to restart the investigation into Powell at any time. Senator Tillis expressed support for Warsh, calling him a 'great nominee' and stating he would vote in favor of his confirmation once the DOJ dropped its investigation into Powell.