The US Department of Justice's recent decision to drop its investigation into Federal Reserve Chair Jerome Powell has potentially paved the way 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 vote from the Senate after his confirmation hearing. Trump, who has been critical of Powell's management of interest rates, chose Warsh to address these concerns.
However, Republican Senator Thom Tillis had vowed to block Warsh's confirmation as long as the DOJ's investigation into Powell continued. The probe, which was dropped on Friday, centered on cost overruns in a Federal Reserve building project. Following the news, betting odds on Warsh's confirmation before May 15 surged from around 30% to over 80%.
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. Pirro noted that she would not hesitate to restart the investigation if warranted.
The development could grant Trump greater influence over US monetary policy and provide him with more allies on the Federal Reserve board, particularly in matters 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. Warren also pointed out that the administration is still pursuing a court case against Fed Governor Lisa Cook.
Senator Tillis, on the other hand, expressed his support for Warsh, describing him as a 'great nominee' and stating that he would vote in favor of Warsh once the DOJ dropped its investigation into Powell.