President Donald Trump’s command of US financial and economic policy may have moved a step closer now that his Justice Department has receded from an investigation into Federal Reserve Chairman Jerome Powell, meaning his nominee to replace Powell may now have an open path to confirmation.
Fed chairman nominee Kevin Warsh, whose own considerable wealth includes some assets in the crypto world, is awaiting a final Senate vote after appearing in a confirmation hearing this week. Trump, who has tirelessly accused Powell of maintaining excessively high US interest rates, chose Warsh to remedy that, but Republican Senator Thom Tillis had vowed to block the confirmation as long as the DOJ pushed for an investigation into Powell for cost overruns in a Fed building project.
The criminal investigation was dropped on Friday, and Attorney General Jeanine Pirro said the DOJ asked the Fed’s inspector general to investigate the renovation situation and issue a report. When the news broke, Kalshi’s prediction increased bets on Walsh’s confirmation before May 15 from about 30% odds to more than 80%.
“I expect a comprehensive report shortly and am confident that the outcome will help resolve, once and for all, the issues that prompted this office to issue the subpoenas,” Pirro wrote in a post on social media X. “I have therefore directed my office to close our investigation as the IG takes over this investigation. Please note, however, that he will not reopen a criminal investigation.”
Putting his own people at the top of the Federal Reserve not only equals Trump’s greater influence on US monetary policy, but it also leaves him with more allies on the Fed’s board as it makes fiscal policy decisions – including implementing regulations governing the crypto industry and stablecoin issuers.
Because of Tillis’ threat, Warsh may have been in a holding pattern while the DOJ pursued its investigation, which could have left Powell in charge of the Fed indefinitely, well beyond the May 15 expiration of his term. Now, the Republican-majority Senate may move more quickly toward confirmation of the nominee, who insisted during his hearing that he would act independently of White House leadership.
Senator Elizabeth Warren, the ranking Democrat on the Senate Banking Committee, which is considering his nomination, rejected the move, noting that the administration is still pursuing Fed Governor Lisa Cook in court.
“This is just an attempt to clear the way for Senate Republicans to install President Trump’s stooge Kevin Warsh as Fed chair,” Warren said in a statement. “Let’s be clear about what the Justice Department announced today: They threatened to reopen the bogus criminal investigation of Fed Chairman Powell at any time while failing to drop their ridiculous criminal case against Governor Lisa Cook.”
Tillis called Warsh a “great nominee.” In his own post this week on X, the senator said he would vote yes for Warsh when the DOJ backs off from Powell:
“I look forward to supporting him out of committee when the DOJ drops their bogus investigation into Chairman Powell that threatens the Fed’s independence.”
