DOJ drops Fed probe, clearing path for Trump’s nominee
The widely criticized investigation was stalling a Senate confirmation vote on Kevin Warsh, who has been tapped to lead the central bank as chair.
President Donald Trump's nominee to lead the Federal Reserve may now have an easier path to confirmation.
On April 24, the U.S. Department of Justice dropped its probe into Fed Chair Jerome Powell — an investigation that was stalling the confirmation process for Kevin Warsh, Trump's pick to head up the Fed after Powell's term as chair ends in May.
Key members of the Senate Banking Committee, which must greenlight Warsh's nomination before it can move to a full Senate vote, had criticized the probe as politically motivated.
What the DOJ said: U.S. Attorney for the District of Columbia Jeanine Pirro announced the case's conclusion in a post on social media.
The Inspector General for the Federal Reserve, she said, would look into the alleged mismanagement of a renovation project at Fed headquarters — the issue at the heart of the DOJ probe. "Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry," Pirro wrote — adding that she expects "a comprehensive report in short order" and is "confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas."
She did not, however, close the door on a future investigation. "Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so," Pirro said.
What the investigation was about: In January, Powell announced in a rare video statement that the Fed was served subpoenas linked to his testimony before a Senate committee last year.
Though the DOJ said the investigation was about comments Powell made regarding the Fed's renovation budget, he claimed it was really driven by the Fed's refusal to cut short-term interest rates at the president's preferred speed.
The investigation was quickly criticized by former Fed governors, Treasury secretaries and White House economic advisors, who raised concerns about the central bank's independence and called on the DOJ to drop its inquiry.
Trump said as recently as April 21 that he wanted the investigation to continue.
Why it matters: Other critics of the DOJ's investigation were Democrats on the Senate Banking Committee — and Republican Thom Tillis of North Carolina, who vowed to join his Democratic colleagues in blocking any Trump nominee from moving forward as long as the investigation continued.
Because Republicans have such a narrow majority on the committee, they need Tillis' vote to advance Warsh's confirmation to a full Senate vote. A spokesperson for Tillis told CNN just last week that the senator "will support Kevin Warsh once the DOJ investigation has concluded."
Committee Democrats, however, remain unconvinced that Warsh is the best person for the job.
"This is just an attempt to clear the path for Senate Republicans to install President Trump's sock puppet Kevin Warsh as Fed Chair," Sen. Elizabeth Warren of Massachusetts said in a statement after the DOJ's investigation was dropped, adding that Warsh's nomination "should not proceed."
What happens next: Warsh already sat for his confirmation hearing earlier this week, facing tough questions from senators on both sides of the aisle about his loyalties to the president, his time as a Fed governor and his finances.
Now that Tillis' main objection has been addressed, the committee appears likely to advance Warsh's nomination to a full Senate vote. If Warsh is confirmed, he will be installed as the next Fed chair once Powell's term ends next month.