Senate Republicans are moving closer to appointing Kevin Warsh as the next Chairman of the Federal Reserve after Senator Thom Tillis announced on Sunday that he would stop blocking the nomination.
Senator Tillis, a Republican from North Carolina, had previously stalled Warsh’s nomination along with others due to a criminal investigation by the Justice Department into current Chairman Jerome Powell regarding cost overruns on renovations at the Fed’s headquarters. There have been accusations from both parties that the investigation is politically motivated.
That deadlock was cleared on Friday when U.S. Attorney for the District of Columbia Jeanine Pirro revealed the Justice Department would drop the investigation but reserved the option to reopen it. Tillis stated on NBC’s “Meet the Press” that he felt the investigation was conclusively resolved, indicating the department was not being weaponized against the Fed’s independence.
The Senate Banking Committee, which has a Republican majority of 13-11, is anticipated to vote on Wednesday to send the nomination to the full Senate. Until now, Tillis’ opposition had essentially stalled the committee, making it infeasible for Chairman Powell to move forward with the approval before his term ends on May 15.
Warsh, who served as a Fed director from 2006 to 2011, has considerable backing among Republicans, yet he faces strong criticism from Senate Democrats. They claim—without evidence—that he would yield to President Trump’s ongoing demands for lower interest rates.
If confirmed, his appointment could bring stability to the central bank. Last year, the administration attempted to oust Fed Governor Lisa Cook, and President Trump has hinted at dismissing Powell if Cook remains at the Fed. This matter is currently before the Supreme Court. Powell’s term lasts until 2028, and he has not indicated whether he will continue serving.
Powell has mentioned he would only step down if the investigation concludes definitively and transparently. Pirro’s statement noted that the case would be handed to the Fed’s inspector general, who has been looking into it since July.
It’s likely that Powell will be questioned about his future plans during a news conference after this week’s policy meeting, and the Fed is expected to maintain interest rates as officials assess the ramifications of the ongoing conflict with Iran.
Tillis rejected the idea that the administration would find alternate means to pressure Powell, stating that the investigation backfired, causing delays to the very confirmation the White House desired. He suggested that Warsh would have been identified already without the investigation.
