President Donald Trump’s command over American financial and economic policy may have taken another step now that his Justice Department has backed down from an investigation of 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 considerable wealth includes some crypto assets, is awaiting a final Senate vote after appearing at a confirmation hearing this week. Trump, who has relentlessly blamed Powell for keeping U.S. interest rates too high, picked Warsh to remedy that, but Republican Sen. Thom Tillis had vowed to block the confirmation as long as the Justice Department pressed an investigation into Powell for cost overruns on a Federal Reserve construction project.
That criminal investigation was dropped Friday, and Attorney General Jeanine Pirro said the Justice Department asked the Federal Reserve’s inspector general to investigate the renewal situation and issue a report. When the news broke, Kalshi’s prediction betting on Walsh’s confirmation before May 15 skyrocketed from about 30% to more than 80%.
“I expect a full report in short order and am confident that the outcome will help resolve, once and for all, the issues that led this office to issue subpoenas,” Pirro wrote in a post on the social media site
Putting his own people at the top of the Federal Reserve not only equates to greater influence for Trump over American monetary policy, but also leaves him with more allies on the Fed board when it comes to making financial policy decisions, including the implementation of rules governing the cryptocurrency industry and stablecoin issuers.
Because of Tillis’ threat, Warsh could have been in a holding pattern while the Justice Department pursued its investigation, which could have left Powell in charge of the Federal Reserve indefinitely, well beyond the expiration of his term on May 15. Now, the Senate, with a Republican majority, could move more quickly toward confirming the candidate, who insisted during his hearing that he would act independently of instructions from the White House.
Sen. Elizabeth Warren, the ranking Democrat on the Senate Banking Committee considering her nomination, dismissed the measure, noting that the administration is still pursuing Federal Reserve Governor Lisa Cook in court.
“This is just an attempt to clear the way for Senate Republicans to install President Trump’s pocket, Kevin Warsh, as chairman of the Federal Reserve,” Warren said in a statement. “Let’s be clear about what the Justice Department announced today: They threatened to restart the bogus criminal investigation into Fed Chair Powell at any time, but they did not drop their ridiculous criminal investigation against Governor Lisa Cook.”
Tillis called Warsh a “great candidate.” In his own post this week on X, the senator said he would vote yes on Warsh once the Justice Department backs down on Powell:
“I look forward to supporting him outside of the committee once the Justice Department drops its bogus investigation into Chairman Powell that threatens the independence of the Federal Reserve.”
