The US Department of Justice's decision to drop its investigation into Federal Reserve Chair Jerome Powell may have brought President Donald Trump one step closer to exerting greater control over the country's financial and economic policies. Trump's nominee to replace Powell, Kevin Warsh, has been awaiting a Senate vote after a confirmation hearing. 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.
The investigation, which was related to cost overruns in a Fed building project, was dropped on Friday, with the DOJ asking the Fed's inspector general to look into the matter and issue a report. Following the news, the odds of Warsh's confirmation before May 15 rose from around 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 the questions that led to the investigation.
Trump's ability to appoint his own people to the Federal Reserve would not only increase his influence over US monetary policy but also provide him with more allies on the Fed board as it makes decisions on financial policy, including rules governing the crypto industry and stablecoin issuers. Senator Elizabeth Warren dismissed the move, calling it an attempt to clear the path for Warsh's confirmation.
She 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, calling him a 'great nominee' and stating that he would vote in favor of him once the DOJ dropped its investigation into Powell.