Unlock the White House Watch newsletter for free
Your guide to what Trump’s second term means for Washington, business and the world
Kevin Warsh’s nomination as the next chair of the Federal Reserve has been approved by the Senate banking committee, moving Donald Trump’s pick one step closer to leading the US central bank.
The committee voted 13 to 11 on Wednesday to allow Warsh’s candidacy to proceed to the Senate floor for a full vote, which is expected to take place in the coming days.
The nomination had been gridlocked after Thom Tillis, a Republican senator from North Carolina, said he would not approve it until a criminal probe into Jay Powell, the incumbent Fed chair, was abandoned.
The Department of Justice last week said it would drop its investigation and shift the case to the Fed’s inspector general, clearing the way for Tillis to support the nomination. Warsh is widely expected to be approved by the full Senate, where Republicans hold a narrow majority. Warsh needs the support of a simple majority of lawmakers in the 100-member chamber to be confirmed as Fed chair.
Wednesday’s committee vote comes hours ahead of what is expected to be Powell’s last press conference as Fed chair, which will be closely watched for signs of whether he intends to continue to play a role at the central bank.
Powell’s term as chair ends on May 15. He had indicated he would remain in the role if a replacement was not confirmed on time. While most Fed chairs tend to depart after their term running ends, he has the option to stay on as a governor — a more junior role — until 2028.
Members of the banking committee voted along party lines on Wednesday to advance Warsh’s nomination. Democrats have criticised Warsh’s selection, with Elizabeth Warren, the party’s most senior member of the banking committee, warning he would be a “sock puppet” for Trump.
Warren and other Democratic lawmakers have said they remain concerned that Trump will continue to place undue pressure on the Fed.
Acting US attorney-general Todd Blanche at the weekend did not rule out reopening the criminal investigation into Powell at a later date. Trump has also sought to sack Fed governor Lisa Cook, in a case that is now pending before the US Supreme Court.
The president has made clear he expects the next chair to lower interest rates, which he has said should be the lowest in the world. In a hearing before the committee last week, Warsh defended Fed independence and said Trump had never directly asked him to cut rates.
“The president never asked me to predetermine, commit, fix or decide on any interest rate decision, in any of our discussions,” the Fed nominee said. “Nor would I ever agree to do so,” he told senators.
But he also caused a stir by declining to say that Trump had lost the 2020 presidential election.
“We try to keep politics out of the Fed,” he said, when pressed on the subject.
Source:
www.ft.com