Kevin Warsh, second from left, listens during a panel discussion at the Semafor 2024 World Economy Summit on April 18, 2024, in Washington, D.C. (Photo by Tasos Katopodis/Getty Images for Semafor)
WASHINGTON — President Donald Trump’s new Federal Reserve chair pick likely faces headwinds in the U.S. Senate, as a key lawmaker opposes the administration’s ongoing criminal probe of current Fed leader Jerome Powell.
Trump announced early Friday he’s tapped Kevin Warsh to lead the central bank after Powell’s term ends in May. Warsh sat on the Federal Reserve Board of Governors from 2006 to 2011 after being nominated by President George W. Bush and is a visiting scholar at Stanford University’s business school and the university’s conservative think tank, the Hoover Institution.
“I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best,” Trump wrote on his own platform, Truth Social. “On top of everything else, he is ‘central casting,’ and he will never let you down.”
But the president is one vote short needed to push the nominee through the tightly divided Senate Banking Committee if all Democrats on the panel vote against.
Sen. Thom Tillis, R-N.C., a member of the Banking Committee, praised Warsh as a “qualified nominee with a deep understanding of monetary policy.”
But Tillis, who is retiring after this term, said he won’t vote for the pick if Trump continues to investigate Powell on accusations that he lied to Congress over the cost of renovations to the Fed’s Washington, D.C., headquarters.
“Protecting the independence of the Federal Reserve from political interference or legal intimidation is non-negotiable. My position has not changed: I will oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman, until the DOJ’s inquiry into Chairman Powell is fully and transparently resolved,” Tillis wrote on social media Friday morning.
The Federal Reserve holds significant influence over the nation’s economy, and numerous experts advise separating monetary policy from political influence. Adjusting interest rates, to cool inflation or stimulate the economy, is one tool the central bank uses to accomplish maximum employment and price stability.
Threats to Powell
Trump has publicly threatened to fire Powell multiple times if the chair did not lower interest rates more aggressively.
Powell revealed in mid-January that he received a federal grand jury subpoena from the Department of Justice for a probe into whether he lied to Congress about construction costs.
Powell said in a rare video statement at the time that the investigation was not purely about oversight but rather about “setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.”
Deputy Attorney General Todd Blanche declined to comment on the status of the subpoenas Friday when asked if Trump’s nomination process would speed up the investigation into Powell.
“I don’t think the timing of President Trump’s decision to nominate somebody is a controlling factor in any investigation,” he told reporters at an unrelated press conference at the Justice Department.
No commitment to lower rates
Trump praised Warsh on social media Friday morning, upon announcing his decision.
Warsh, a former New York banker and economic adviser to Bush, served on the Fed board through the tumultuous global financial crisis.
Trump told reporters Friday afternoon that he hasn’t asked Warsh about a commitment to lower interest rates.
“I don’t want to ask him that question. I think it’s inappropriate. Probably, probably would be allowed, but I want to keep it nice and pure. But he certainly wants to cut rates. I’ve been watching him for a long time,” Trump said.
When asked about Tillis’s opposition, Trump called the senator an “obstructionist.”
“I mean, you know, if he doesn’t approve, we just have to wait till somebody comes in that will approve it, right?” Trump said.
Sen. Elizabeth Warren, D-Mass., a member of the Senate Banking Committee, urged her Republican colleagues on the panel to oppose Trump’s pick.
“Trump can’t appoint his next puppet to the Fed all by himself. The Senate has to approve it. Any senator who claims to care about the independence of the Fed, including my Republican colleagues, should refuse to move forward with this nomination period until Trump drops his witch hunts,” Warren said in a video message posted on social media Friday afternoon.
Powell has not been Trump’s only target on the Federal Reserve. The president is awaiting a ruling from the U.S. Supreme Court on whether he violated the law when he fired Federal Reserve Board Gov. Lisa Cook, a President Joe Biden appointee, via social media over the summer.
Jacob Fischler and Shauneen Miranda contributed to this report.
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