After what may go down as the most controversy-laden confirmation process in Federal Reserve Bank history, conservative economist Kevin Warsh was confirmed Tuesday to a 14-year term as a Federal Reserve Governor, clearing the way for his appointment as chair. Democrat Sen. John Fetterman (D-PA) joined Republicans in a 51-45 vote. Current Fed Chair Jerome Powell’s term ends on Friday.
Warsh’s arduous journey included a blockade from a member of his own political party, deep skepticism about his own independence from Trump, and ongoing questions about his vast personal wealth and obscured investments. His candidacy was shrouded in distrust, mainly from Democrats, because of Trump’s open attempts to force the U.S. central bank to enact monetary policy based on his desires to lower borrowing costs rather than on economic data and inflation risks.
And some economists and other experts have highlighted what they view as Warsh’s flip-flopping stance on monetary policy as Warsh’s signal to Trump that he’ll be an amenable central bank head.
“He, more than others, has a set of policy views and macroeconomic views that are very correlated to, call it, political, presidential, electoral outcomes,” Skanda Amarnath, who leads an economic policy organization called Employ America, told TPM in February.
Representing an unprecedented threat to Fed independence, Trump has, so far unsuccessfully, tried to fire Fed Governor Lisa Cook, and let his Department of Justice launch a sham investigation into Powell for criminal misconduct pertaining to costs of a Federal Reserve building renovation project. Because of that investigation, retiring Sen. Thom Tillis (R-NC), a member of the Senate Banking Committee, refused to vote to confirm Warsh until the DOJ dropped its investigation. During Warsh’s first Banking Committee hearing, Trump’s words were repeatedly used against him as senators from both parties pressed the nominee on whether he could operate independently from the president. Warsh said he would.
And when U.S. Attorney for D.C. Jeanine Pirro kind of dropped the case — adding in a social post that she would not “hesitate to restart a criminal investigation” — Tillis dropped his blockade and Warsh’s path to lead the central bank was clear.
Notably, current Chair Powell has said he will stay on the board as a Fed governor after his term as chair ends. Powell’s governor term lasts until early 2028, and he said he will remain on the board until the investigation into the Fed building renovations are “well and truly over, with transparency and finality.”
