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- Jeanine Pirro said the Justice Department dropped the criminal inquiry into Jerome H. Powell; the Fed inspector general will review.
- Senator Thom Tillis called the Fed watchdog credible and warned against DOJ weaponization, helping ease the Banking Committee deadlock.
- Kevin Warsh enjoys broad Republican support; Democrats call him a sock puppet; President Trump pressured the Fed and threatened to fire Jerome H. Powell.
The Senate is set to proceed with Kevin Warsh’s nomination to lead the Federal Reserve, after a pivotal Republican lawmaker, Senator Thom Tillis of North Carolina, said on Sunday that he was prepared to lift his blockade and lend his support toward confirmation.
For weeks, Mr. Tillis refused to advance Mr. Warsh or any other Fed nominee while the Trump administration investigated the current chair, Jerome H. Powell, in an inquiry that many have described as politically motivated.
But Jeanine Pirro, the U.S. attorney for the District of Columbia, said on Friday that the Justice Department would drop the matter, which focused on cost overruns in a renovation of the Fed’s headquarters. Even though Ms. Pirro said that she would “not hesitate” to reopen the criminal investigation, her move to stand aside still proved sufficient for Mr. Tillis, who said on NBC’s “Meet the Press” that he was ready to move forward with a key, first committee vote on Mr. Warsh.
“They have made it very clear that the current investigation is completely and fully ended,” Mr. Tillis said of his conversations with the Justice Department.
The senator said those discussions gave him the assurances he needed “to feel like they were not using the D.O.J. as a weapon to threaten the independence of the Fed.”
Mr. Tillis’s vote is pivotal in determining whether Mr. Warsh, who served as a Fed governor from 2006 to 2011, will be confirmed by the time Mr. Powell’s term officially ends on May 15. While Mr. Warsh enjoys broad Republican support, Senate Democrats have called him a “sock puppet,” given President Trump’s insistence that he would pick only someone who supported lower rates to replace Mr. Powell.
Republicans hold a slim 13-to-11 majority on the Banking Committee, which oversees the Fed, meaning Mr. Tillis’s opposition had created an insurmountable deadlock there. Lawmakers are set to hold a vote on Wednesday to advance Mr. Warsh’s nomination to the full Senate.
If confirmed, Mr. Warsh, will assume leadership of an institution that has had to defend its ability to operate independently amid an extensive pressure campaign from White House for lower interest rates.
The criminal investigation into Mr. Powell and the Fed was the latest broadside from the administration, coming on the heels of an attempt by Mr. Trump to oust Lisa D. Cook, a sitting governor, last year. That case is currently before the Supreme Court.
Mr. Trump has also threatened to fire Mr. Powell if he decides to stay on at the central bank after his term as chair ends in May. He can stay on as a governor until 2028.
Mr. Powell has yet to disclose whether he will do so but has stipulated that he will only leave once the investigation into him and the Fed is “well and truly over, with transparency and finality.”
He is likely to face questions about his future this week at a news conference after the Fed’s next policy meeting, at which officials are expected to hold rates steady as they grapple with an ongoing energy shock from the war in Iran.
In her statement Friday, Ms. Pirro said that the investigation into Mr. Powell would instead be handled by the inspector general for the Fed. That office has been reviewing the matter since July.
Mr. Tillis described the watchdog on Sunday as credible, while brushing aside recent comments by Mr. Trump and his deputies that suggested that they might still continue to scrutinize Mr. Powell. Those actions, the senator said, had essentially backfired for the president by slowing down the confirmation of Mr. Warsh.
“That’s the absurdity of this whole thing. If this is investigation, which is now closed, had never occurred, we wouldn’t be having this discussion. He would have been confirmed by May 15,” the senator said, adding he expected the Senate to act by that date, when Mr. Powell’s term ends.
Mr. Tillis also said he was unconcerned about the possibility that Ms. Pirro could soon return to court and appeal a decision that had blocked her from issuing a subpoena against Mr. Powell. The judge in that case quashed the request on grounds that the investigation itself was politically motivated.
The senator said he believed that the appeal sought to challenge a part of the ruling that did not affect Mr. Powell, though he pointed out that the Fed chair might stay on at the central bank as a governor while the case resolves.
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