The Senate voted to install Kevin Warsh as chairman of the Federal Reserve on Wednesday, handing the millionaire Trump ally the reigns of America’s monetary policy even as he faced skepticism over his ability to remain independent of presidential influence.
Warsh will replace Fed Chair Jerome Powell, who is retiring this month. Powell has been a regular target of the president, who urged him repeatedly to cut interest rates despite the central bank’s decision to hold rates steady.
Warsh was confirmed 54-45 along party lines in the Republican-controlled Senate. The vote mirrored the Senate Banking Committee’s partisan decision to advance his nomination in April after a combative confirmation hearing in which the independence of the central bank from political pressure was the defining issue.
Only one Democrat, Sen. John Fetterman of Pennsylvania, who frequently bucks his party on key votes, voted to confirm Warsh as chairman, as he did when the Senate confirmed Warsh to a 14-year term on the Fed’s Board of Governors in a separate vote Tuesday.
The former Federal Reserve governor faced pointed questions from lawmakers over his ability to safeguard the integrity of the interest rate-setting institution. Under oath, he vowed he would not capitulate to Trump’s demands for lower interest rates.
Warsh argued at the hearing that outward political pressure is not a threat to the central bank, but opining on fiscal and social policies outside of the Fed’s purview is.
“The president never asked me to predetermine, commit, fix, decide on any interest rate decision in any of our discussions,” Warsh said. “Nor would I ever agree to do so if he had.”
But Trump has made no secret of his belief that the White House should have greater control over the nation’s monetary policy.
He disagreed with the Fed’s cautious approach to slashing interest rates under Powell, whom the president verbally attacked numerous times as part of a public pressure campaign to force the Fed’s leader to quickly lower rates.
The feud surpassed rhetoric when the Justice Department subpoenaed Powell and accused him of misleading Congress about the ongoing $2.5 billion building renovation project at the Fed’s Washington headquarters. The criminal probe drew outrage from key senators on the banking committee, some of whom vowed to block Warsh’s nomination until the investigation was dropped.
Retiring Sen. Thom Tillis, R-N.C., blasted the Powell probe during Warsh’s confirmation hearing and reaffirmed his commitment to withholding his vote as long as it remained active. Tillis cited the potential for the investigation to delay Powell’s planned exit from his post as chairman when his term ends on May 15.
Powell accused the Trump administration of politically targeting him over the Fed’s interest rate decisions in a statement earlier this year. At his final news conference as Fed chief on April 29, Powell said the Trump-backed investigation left him “no choice” but to remain on the central bank’s board of governors after he leaves the chairmanship.
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U.S. Attorney for the District of Columbia Jeanine Pirro, who brought the criminal investigation, announced she was dropping the case in an abrupt about-face days after Warsh’s confirmation hearing. The Trump-appointed attorney had vowed to continue the investigation after a federal judge quashed a pair of subpoenas issued to Powell and denied the DOJ’s request to reconsider.
Pirro said she directed her office to close the investigation after the Federal Reserve inspector general agreed to review the multibillion-dollar renovation of the central bank’s Washington headquarters.
That decision cleared the way for Warsh’s nomination to advance to the full Senate for a final confirmation vote, but Powell and Democrats on the banking committee remained skeptical.
Powell, for his part, said the resolution for the probe did not meet the standards of “transparency and finality” he had set to substantiate before his full retirement. Massachusetts Sen. Elizabeth Warren, the ranking Democrat on the banking committee, said “no one is fooled,” by the closing of the probe.
“Trump is still going after control of the Fed, and he is keeping the threat of bogus criminal charges alive until he gets what he wants,” Warren said before voting against referring Warsh’s nomination to the full Senate.
Warsh has long been a favorite among Republican circles. He is the son-in-law of billionaire Trump donor Ronald Lauder, and served as a Federal Reserve governor in the early 2000s after being nominated by then-President George W. Bush.
The U.S. inflation rate jumped to an annual pace of 3.8% last month, its highest in nearly three years. The spike, driven by the Iran war as higher gas and energy prices ripple through the economy, means the Fed is unlikely to meet Trump’s demands for lower interest rates.
Warsh, who was known as a monetary hawk during his tenure on the board of governors, won’t be able to change the Fed’s target inflation rate alone. The central bank must have a simple majority of the Federal Open Market Committee’s 12 voting members to change rates.
Powell will be one of those voting members but has said he intends to keep a “low profile.”
Sydney Carruth is a breaking news reporter covering national politics and policy for MS NOW. You can send her tips from a non-work device on Signal at SydneyCarruth.46 or follow her work on X and Bluesky.