WASHINGTON — Kevin Warsh, President Donald Trump’s nominee for Federal Reserve Chair, pledged to maintain the central bank’s independence during his confirmation hearing. This promise comes amid Trump’s demands for lower interest rates. Warsh, previously a Fed board governor, appeared before the U.S. Senate Committee on Banking, Housing and Urban Affairs. His confirmation is entangled with ongoing controversies surrounding current Fed Chair Jerome Powell.
Trump’s criminal investigation into Powell over a $2.5 billion renovation project at the Fed is a significant hurdle for Warsh. Sen. Thom Tillis, R-N.C., threatens to oppose Warsh’s nomination unless Trump halts the investigation. With a committee split of 13 Republicans and 11 Democrats, Tillis’s dissent could prevent Warsh’s advancement to the full Senate.
Sen. Elizabeth Warren, D-Mass., accused Trump of wanting to manipulate the Fed for short-term economic gains before elections. Tillis, instead of questioning Warsh, displayed visuals highlighting cost overruns at the Fed’s headquarters, arguing the investigation should end to support Warsh’s nomination.
Court Action
U.S. District Court Judge James Boasberg recently blocked subpoenas related to Trump’s probe, citing evidence of harassment. Despite this, federal investigators continue probing the Fed, as detailed by the New York Times. Trump has publicly threatened to fire Powell if interest rates don’t drop.
Powell’s term ends May 15, but he plans to remain as chair pro tempore until a successor is confirmed. Trump has stated, “If Powell stays on, well then, I’ll have to fire him,” as reported by Fox Business.
A ‘Battle-Tested’ Pick
Republicans praised Warsh, noting his experience during the 2008 financial crisis. Senate Banking Chair Tim Scott, R-S.C., called Warsh “battle-tested.” However, Democrats are concerned about Warsh’s independence from Trump, especially with economic issues looming ahead of the midterm elections. Sen. Andy Kim, D-N.J., questioned Warsh on affordability struggles, highlighting the impact of past monetary policies.
Warsh acknowledged some Fed responsibility for inflation issues but defended his reform agenda, emphasizing the Fed should remain focused on its core tasks. He responded to concerns about the Fed’s role amid rising costs due to Trump’s policies, asserting the importance of a focused central bank.
Lisa Cook Firing
Senators Warren and Angela Alsobrooks, D-Md., addressed Trump’s disputed firing of Federal Reserve Board Governor Lisa Cook, currently under Supreme Court review. During oral arguments, conservative justices questioned Trump’s grounds for dismissal. Alsobrooks pressed Warsh on defending Cook’s tenure, to which Warsh reiterated his stance on the Fed’s independence and the pending court case.
Warsh clarified that Trump has not asked him to commit to specific interest rate policies, stating, “The president never generally or specifically instructed me, or suggested I should commit to any interest rate path whatsoever.”
