The US Department of Justice, under President Donald Trump, has dropped its investigation into Federal Reserve Chair Jerome Powell, potentially paving the way for Trump's nominee, Kevin Warsh, to take the reins. Warsh, who has significant personal wealth, including cryptocurrency assets, has been awaiting a Senate vote following his confirmation hearing. Trump, who has criticized Powell for high interest rates, selected Warsh to address this issue. However, Republican Senator Thom Tillis had vowed to block Warsh's confirmation as long as the DOJ pursued its investigation into Powell over cost overruns in a Federal Reserve building project.
With the investigation now dropped, and the matter referred to the Fed's inspector general, the path to confirmation for Warsh appears to have been cleared. The news has boosted predictions of Warsh's confirmation, with some odds rising from 30% to over 80%. US Attorney for the District of Columbia Jeanine Pirro stated that she expects a comprehensive report and is confident that the outcome will resolve questions surrounding the investigation. Trump's ability to install his own personnel at the Federal Reserve would grant him greater influence over US monetary policy and provide him with more allies on the Fed board, particularly in decisions related to the crypto industry and stablecoin issuers.
Senator Elizabeth Warren criticized the move, calling it an attempt to clear the path for Warsh's confirmation and noting that the administration is still pursuing a case against Fed Governor Lisa Cook. Senator Tillis, on the other hand, expressed support for Warsh, calling him a 'great nominee' and stating that he would vote in favor of Warsh once the DOJ dropped its investigation into Powell.