The US Department of Justice's decision to drop its investigation into Federal Reserve Chair Jerome Powell may have brought President Donald Trump's economic agenda one step closer to fruition. Trump's nominee to replace Powell, Kevin Warsh, may now have a smoother path to confirmation. Warsh, who has significant personal wealth, including assets in the crypto sector, is awaiting a final Senate vote after a recent confirmation hearing. Trump, who has criticized Powell for maintaining high interest rates, chose Warsh to address this issue.
However, Republican Senator Thom Tillis had vowed to block Warsh's confirmation as long as the DOJ's investigation into Powell continued. The investigation, 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 may restart the investigation if warranted. Trump's ability to appoint his own officials 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 regards to crypto industry regulations.
Due to Tillis' threat, Warsh's confirmation may have been delayed, potentially allowing Powell to remain in charge beyond the May 15 expiration of his term. Now, the Republican-controlled Senate may be able to expedite Warsh's confirmation, despite his insistence on acting independently of White House direction. Senator Elizabeth Warren criticized the move, calling it an attempt to clear the path for Warsh's confirmation.
Warren noted that the administration is still pursuing a court case against Fed Governor Lisa Cook. Tillis, on the other hand, expressed his support for Warsh, stating that he would vote in favor of the nominee once the DOJ dropped its investigation into Powell.