Warsh Fed Nomination Stalls as GOP Senator Blocks Over Powell Investigation

President Trump's pick for Federal Reserve chair, Kevin Warsh, faces confirmation delays as a Republican senator blocks the nomination over a Justice Department probe into current Fed chief Jerome Powell. The standoff comes as Powell's term expires in May, creating uncertainty about the central bank's leadership.

Four weeks have passed since President Donald Trump announced Kevin Warsh as his choice to lead the Federal Reserve, yet the formal nomination paperwork has still not been submitted to the Senate – an unusual delay that’s creating uncertainty around the nation’s central banking leadership.

The holdup stems from Republican Senator Thom Tillis’s pledge to obstruct any Federal Reserve nominations while the Department of Justice continues investigating current Fed Chairman Jerome Powell over his congressional testimony regarding central bank building renovations in Washington.

Tillis has characterized the investigation as baseless and described it as intimidation tactics by the Trump administration, which has openly criticized Powell for not implementing interest rate cuts as aggressively as desired.

Derek Tang, an analyst with forecasting firm LH Meyer, observed the unusual nature of the situation. “It does strike me as odd that there’s been no forward movement on the Warsh nomination,” Tang noted. “The White House seems no closer to overcoming the Tillis block: that the senator won’t let any nominee for the Fed get past the Senate Banking Committee unless and until the Powell probe goes away.”

The White House has not provided immediate comment on the timeline but has previously stated that Warsh possesses excellent qualifications and expressed eagerness to collaborate with the Senate for swift confirmation.

The Federal Reserve’s independence from immediate political influences and its authority to establish interest rates without presidential interference is broadly viewed as crucial for controlling inflation and maintaining economic stability.

Treasury Secretary Scott Bessent has indicated that the Republican-led Senate Banking Committee is prepared to proceed with confirmation hearings once Warsh receives formal nomination. Committee Republicans, including Tillis, have expressed support for Warsh’s qualifications and suitability for the position.

However, without Tillis’s support to move Warsh’s nomination forward to the full Senate, the committee’s narrow Republican majority cannot overcome unified Democratic resistance.

Both Warsh and Federal Reserve representatives have declined to provide statements.

Powell revealed the Justice Department investigation in January, characterizing it as part of the Trump administration’s “threats and ongoing pressure” to reduce interest rates.

According to a Wall Street Journal report Thursday, the central bank has petitioned a judge to dismiss the government’s subpoenas related to the investigation. The Fed has not commented on this report.

The investigation represents just one obstacle to Trump’s longstanding objective of replacing Powell with a Fed chair more favorable to rate reductions.

With only 11 weeks remaining until Powell’s term concludes on May 15, the timeframe is tighter than what most current Fed governors experienced between nomination and Senate confirmation.

While the timing isn’t necessarily problematic – the Senate confirmed former Trump economic adviser Stephen Miran as a Fed governor in under two weeks last fall – extended delays would place both the nominee and the central bank in an awkward position as the June 16-17 Fed meeting approaches, when rate cut discussions are anticipated.

Trump plans to nominate Warsh for the position currently held by Miran, whose term ended January 31 but who may continue serving until Senate confirmation of his replacement. This change would substitute one rate-cut supporter with another, still leaving Trump appointees one vote shy of controlling the seven-member Fed board.

The president has taken the unprecedented step of attempting to remove Fed Governor Lisa Cook over alleged misrepresentations on her mortgage applications. Cook, appointed by former President Joe Biden, denies any wrongdoing and is challenging her removal in a case now before the Supreme Court. Powell attended January oral arguments, calling it “the most important legal case in the Fed’s 113-year history” due to its implications for central bank independence.

Powell has the option to remain as a Fed governor until January 31, 2028, if he chooses. He has not indicated whether he will leave the board when his chairmanship ends, as nearly all predecessors have done.

Breaking with this tradition would represent an extraordinary decision, signaling Powell’s serious concerns about the Fed’s ability to maintain independence from the administration.

Such concerns stem from Trump’s explicit requirement that Fed nominees support rate cuts and the administration’s unprecedented pressure tactics on central bank leadership, including the Justice Department investigation.

However, remaining on the board would likely attract criticism from the Trump administration and others as a partisan attempt to undermine the president’s authority to appoint new Fed governors.

Even if Powell stayed as a governor, the Federal Open Market Committee would likely follow institutional precedent and select Warsh to chair the policy-making panel.

This scenario would present Warsh with the challenging task of persuading a divided committee to support his preferred rate cuts while navigating the complexities of working alongside his predecessor.