The U.S. Senate Banking Committee approved Kevin Warsh's nomination as Federal Reserve Chair by a 13-11 vote on Wednesday, reflecting sharp partisan divisions. The nomination will now proceed to a full Senate vote, with Warsh expected to assume the position smoothly.
Kevin Warsh, nominated by Trump, successfully passed the review of the U.S. Senate Banking Committee on Wednesday local time, moving one step closer to officially becoming the Federal Reserve Chair.
The committee approved sending Warsh's nomination to the full Senate for a final vote with a 13-11 vote, which is expected to take place in the coming days.
The nomination process had previously been deadlocked. Republican Senator Thom Tillis of North Carolina made it clear that he would not support Warsh’s nomination until the Department of Justice dropped its criminal investigation into current Federal Reserve Chair Powell. A breakthrough came last week when the U.S. Department of Justice announced it was abandoning the criminal probe and transferring the case to the Federal Reserve's Inspector General, clearing the way for Tillis to approve the nomination.
With Republicans holding a slim majority in the Senate, Warsh only needs a simple majority in the full chamber to secure his appointment. Markets have widely anticipated that he will ultimately pass without issue.
This committee vote revealed stark partisan divisions, with all Republicans in favor and all Democrats opposed. Democrats strongly criticized Warsh’s nomination, with Senator Elizabeth Warren, the senior Democratic member of the Senate Banking Committee, stating outright that Warsh would become Trump’s political puppet. Warren and other Democratic lawmakers have consistently expressed concerns that Trump will continue to exert undue pressure on the Federal Reserve, undermining the independence of monetary policy.
Nick Timiraos, known as the 'Fed whisperer,' pointed out that this was the first time the committee had voted along party lines on a Federal Reserve Chair nomination. Prior to 2020, such partisan votes on Fed nominees were extremely rare. The previous two votes for Federal Reserve Chair (both for Powell) were approved overwhelmingly at 22-1 and 23-1 respectively.
Hours after the committee vote concluded, incumbent Federal Reserve Chair Powell will hold his final press conference during his term, with markets closely watching his next moves.
Powell’s term as Chair will officially expire on May 15. He has previously stated that he is willing to stay on if his successor is not confirmed in time. According to the rules, even if Powell steps down as Chair, he can retain his position as a Fed governor until 2028.
The Federal Reserve is currently embroiled in multiple political controversies. Not only is Trump pushing to replace the Fed Chair, but he is also attempting to remove Fed Governor Lisa Cook, with the related lawsuit now before the U.S. Supreme Court. Acting Attorney General Blanch of the Department of Justice has not ruled out the possibility of reopening an investigation into Powell in the future, meaning external political pressures on the Fed persist.
Trump has publicly stated that he expects the next Federal Reserve Chair to implement interest rate cuts and maintain U.S. interest rates at the lowest levels globally. During an earlier confirmation hearing, Warsh defended the independence of the Federal Reserve, denying any political interference from the White House. He explicitly told senators that the president had never pressured him on interest rate decisions, nor demanded pre-commitments or finalized any monetary policy resolutions, and that he would never agree to such requests.
However, Wash's remarks at the hearing sparked significant controversy. When asked whether he acknowledged Trump's defeat in the 2020 presidential election, he deliberately avoided answering, merely stating his commitment to keeping politics out of the Federal Reserve. This stance further deepened concerns among Democrats and outsiders about the Fed's potential political infiltration and weakened neutrality.
Editor/Rocky