WASHINGTON — President Donald Trump’s pick for Federal Reserve chair, Kevin Warsh, may face obstacles in the U.S. Senate. A key senator disagrees with the administration’s investigation of current Fed Chair Jerome Powell. Trump announced Warsh as his choice early Friday, following Powell’s term ending in May. Warsh, a former Federal Reserve Board member and a visiting scholar at Stanford University, brings experience from the 2006-2011 financial crisis.
Trump praised Warsh on Truth Social, stating, “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.” Despite this endorsement, Trump’s nomination lacks one crucial vote in the Senate Banking Committee if all Democrats oppose it.
Sen. Thom Tillis, R-N.C., supports Warsh as a “qualified nominee with a deep understanding of monetary policy.” However, Tillis insists he won’t back Warsh if Trump pursues the investigation into Powell for allegedly lying to Congress about Federal Reserve building renovation costs. Tillis emphasized the need for the Federal Reserve’s independence from political influence and stated, “Protecting the independence of the Federal Reserve from political interference or legal intimidation is non-negotiable.”
The Federal Reserve’s significant economic role underscores the importance of its independence. Many experts advise keeping monetary policy decisions free from political pressure to effectively manage interest rates, inflation, and employment. Trump has previously threatened to dismiss Powell if he didn’t lower interest rates more aggressively.
Threats to Powell
Powell revealed in January that he received a DOJ subpoena regarding accusations of misleading Congress. He clarified that the investigation is about “setting interest rates based on our best assessment of what will serve the public.” Deputy Attorney General Todd Blanche stated that Trump’s nomination decision does not influence the ongoing investigation into Powell.
No commitment to lower rates
Trump announced Warsh’s nomination without asking for a commitment to reduce interest rates, insisting it’s inappropriate to do so. Warsh, having served during the global financial crisis, is seen by Trump as attentive to rate cuts. Trump called Sen. Tillis an “obstructionist” for opposing Warsh and noted that the Senate must approve the nominee regardless of individual opposition.
Sen. Elizabeth Warren, D-Mass., urged Republicans to oppose Warsh’s nomination, arguing that the Senate should not allow Trump to appoint a compliant Fed chair. She stated, “Trump can’t appoint his next puppet to the Fed all by himself. The Senate has to approve it.” Trump’s actions have extended beyond Powell, as he also awaits a Supreme Court decision on the legality of firing Fed Board Gov. Lisa Cook.
