WASHINGTON — President Donald Trump’s pick to lead the Federal Reserve, Kevin Warsh, received praise from most Republicans on the Senate panel overseeing his confirmation Tuesday, including U.S. Sen. Katie Britt, R-Ala., but one GOP senator is putting up a major roadblock to the nominee.
During Warsh’s confirmation hearing in the Senate Banking Committee, U.S. Sen. Thom Tillis, R-N.C., doubled down on his threat to block Warsh’s nomination until the Department of Justice ends the criminal probe into current Fed Chair Jerome Powell.
The investigation stems from Powell’s alleged false testimony to Congress about renovations of the Federal Reserve building. It underscores how Trump and Powell have been at odds, with the president calling to oust the chair and pushing the central bank to lower interest rates.
“We have got to get rid of this investigation,” Tillis said, while acknowledging he thinks Warsh is qualified for the position. “So I can support your nomination.”
Britt looked ready to find a way to move past the hold on Warsh’s nomination. But she emphasized that Congress needs answers to questions on how the money is being spent on the renovations.
“We need to understand where this substantial amount of money has gone, and we need to ensure that every institution, including the Fed, is always making decisions that are in the best interest of the American people,” Britt said during the hearing.
“So I urge everyone involved to make sure that any outstanding questions on this matter come to fruition so that we can get answers and move on and have a smooth and timely transition and confirmation process.”
Recent estimates from the Federal Reserve show the cost of the renovations is about $2.5 billion, roughly $600 million higher than a 2022 estimate of $1.9 billion.
Alabama’s junior senator said Warsh, a former top Fed official and financier, was the “right man for the job at the right time in our country’s history,” explaining how his experience makes him well qualified for the position.
Fed independence
Throughout the hearing, Warsh reiterated that the Fed would remain independent, even as Trump has sought to have the central bank lower federal interest rates. As recently as Tuesday morning during an interview on CNBC, the president indicated his desire for Warsh to lower rates if confirmed.
Higher inflation typically leads the Fed to raise rates, or at least keep them unchanged, rather than cut them. The changes can affect home mortgages, auto loans and business borrowing.
”The president never once asked me to commit to any particular interest rate decision, period, and nor would I ever agree to do so if he had, but he never did,” Warsh said during the hearing.
But Democrats still grilled Warsh over his ideas on Fed independence and his relationship with Trump. The top Democrat on the committee, Sen. Elizabeth Warren of Massachusetts, questioned whether Trump’s attacks on Fed Governor Lisa Cook, the Powell investigation and his repeated calls for lower rates would threaten Warsh’s and the Fed’s ability to remain independent.
“The Senate should not be aiding and abetting Donald Trump’s illegal takeover of the Fed by installing his chosen sock puppet as chair,” Warren said.
Warren also clashed with Warsh about his financial holdings, which she said include more than $100 million in undisclosed investments.
“(I’ve) agreed to divest all of those assets, especially those that you referenced before I take the oath of office,” Warsh said, referring to an agreement he has with the Office of Government Ethics.
The committee has not scheduled a vote to confirm Warsh. Powell’s term will expire May 15, but he could stay on as chair until the Senate confirms his new successor.
The Associated Press contributed to this report.