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 assets in the cryptocurrency space, appeared before a Senate confirmation hearing and is now awaiting a final vote. Trump, who has criticized Powell for high interest rates, chose Warsh to address this issue, but Senator Thom Tillis had threatened to block the confirmation as long as the DOJ investigation was ongoing.
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 review the matter and issue a report. Following the news, predictions of Warsh's confirmation before May 15 increased significantly. US Attorney for the District of Columbia Jeanine Pirro stated that she expects a comprehensive report and is confident that it will resolve the questions that led to the investigation. Trump's ability to appoint his own people to the Federal Reserve would give him greater influence over US monetary policy and provide him with more allies on the Fed board, which makes decisions on financial policy, including rules governing the crypto industry.
The move has been met with criticism from Senator Elizabeth Warren, who dismissed it as an attempt to clear the path for Warsh's confirmation. Warsh has insisted that he would act independently of White House direction, but Warren remains skeptical, pointing out that the administration is still pursuing a separate investigation into Fed Governor Lisa Cook.