A significant development has occurred in the realm of US financial policy, as President Donald Trump's Department of Justice has relinquished its investigation into Federal Reserve Chair Jerome Powell. This move may pave the way for Trump's nominee, Kevin Warsh, to assume the role of Fed Chair, following a confirmation hearing.
Warsh, who possesses substantial wealth, including assets in the cryptocurrency sector, has been awaiting a final Senate vote. Trump, who has consistently criticized Powell for maintaining high interest rates, selected Warsh to address this issue.
However, Republican Senator Thom Tillis had previously stated that he would block Warsh's confirmation as long as the DOJ's investigation into Powell continued, specifically regarding cost overruns in a Fed building project. The DOJ's decision to drop the probe and refer the matter to the Fed's inspector general has potentially cleared the path for Warsh's confirmation.
US Attorney for the District of Columbia Jeanine Pirro announced that her office would close the investigation, allowing the inspector general to conduct an inquiry and issue a report. Following this development, prediction markets have indicated a significant increase in the likelihood of Warsh's confirmation before May 15. Pirro emphasized that while the investigation is being closed, it may be reopened if warranted by the facts.
The appointment of Warsh as Fed Chair would not only grant Trump greater influence over US monetary policy but also provide him with a key ally on the Fed board, which is responsible for making decisions on financial policy, including regulations governing the crypto industry and stablecoin issuers. The previous investigation had potentially placed Warsh's nomination in limbo, allowing Powell to remain in charge of the Fed beyond the expiration of his term on May 15. With the DOJ's investigation dropped, the Republican-majority Senate may now proceed with Warsh's confirmation, despite opposition from Senator Elizabeth Warren, who characterized the move as an attempt to install a Trump ally as Fed Chair. Warsh has insisted that he would act independently of White House direction, and Senator Tillis has expressed support for the nominee, describing him as 'great'