The US Department of Justice's decision to drop its investigation into Federal Reserve Chair Jerome Powell has brought President Donald Trump's pick to lead the Fed, Kevin Warsh, one step closer to confirmation. Warsh, who has significant personal wealth, including investments in the crypto sector, is 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, but Senator Thom Tillis had vowed to block the confirmation as long as the DOJ's investigation into Powell continued. The investigation, which was dropped on Friday, was related to cost overruns in a Fed building project. The US Attorney for the District of Columbia, Jeanine Pirro, stated that the DOJ has asked the Fed's inspector general to investigate the matter and issue a report.
Following the news, the odds of Warsh's confirmation before May 15 increased significantly. Pirro noted that she would not hesitate to restart the investigation if warranted. 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, particularly in decisions related to the crypto industry and stablecoin issuers.
The development may allow the Republican-majority Senate to move more quickly towards confirming Warsh, who has stated that he would act independently of White House direction. However, 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. Tillis expressed his support for Warsh, stating that he would vote in favor of the nominee now that the DOJ has dropped its investigation into Powell.