Senate Banking Committee leaders are split on President Donald Trump’s choice of Kevin Warsh to be the next chairman of the Federal Reserve, while a key Republican on the panel is standing firm on his plans to oppose any nomination until a legal action against the Fed is resolved.
Trump announced his decision to tap Warsh, a Fed governor from 2006 to 2011 as new Fed leader in a Truth Social post Friday. The reaction from the committee with jurisdiction over the nomination indicates there likely will be a clash over Warsh’s confirmation.
“The Federal Reserve’s decisions touch every American household, from mortgage rates to retirement savings, and President Trump has been clear that bringing accountability and credibility to the Federal Reserve is a priority, and his nomination of Kevin Warsh reflects that focus,” Senate Banking Chairman Tim Scott, R-S.C., said in a statement. “As a former Federal Reserve Governor, Kevin has deep knowledge of markets and monetary policy that will be essential in this role.”
Ranking member Elizabeth Warren, D-Mass., warned that Warsh would be subservient to Trump as Fed leader.
“Donald Trump said anybody who disagrees with him will never be Fed Chairman,” Warren said in a statement. “Former Fed Governor Kevin Warsh – who cared more about helping Wall Street after the 2008 crash than millions of unemployed Americans – has apparently passed the loyalty test.”
The independence of the Fed has been in question since the beginning of the second Trump administration. The Department of Justice recently opened an investigation into the Fed’s remodeling project of its Washington headquarters, which Fed Chairman Jerome Powell called a pretext for strong-arming the Fed on interest rates.
Sen. Thom Tillis, R-N.C., a potential swing vote on the Senate Banking Committee, said earlier this month that he would oppose any Fed nominees until the legal action against the central bank is resolved. He repeated that Friday.
In a post on social media site X, Tillis said Warsh is a “qualified nominee with a deep understanding of monetary policy.” But he won’t vote to advance the nomination.
“My position has not changed: I will oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman, until the DOJ’s inquiry into Chairman Powell is fully and transparently resolved,” Tillis wrote.
Trump also is trying to fire Fed governor Lisa Cook over allegations of misstating information on a mortgage application – charges Cook denies. The Supreme Court heard oral argument in the case last week.
The Warsh “nomination is the latest step in Trump’s attempt to seize control of the Fed and follows the Trump Administration’s weaponization of the Department of Justice to open criminal investigations into Fed Governor Lisa Cook and sitting Fed Chair Jerome Powell,” Warren said in her statement. “No Republican purporting to care about Fed independence should agree to move forward with this nomination until Trump drops his witch hunts of the current Chairman of the Federal Reserve and Governor Lisa Cook.”
Scott is one Republican who intends to vote for Warsh. He said Warsh has “deep knowledge of markets and monetary policy” and would maintain the Fed’s arm’s length relationship with the White House.
“Federal Reserve independence remains paramount, and I am confident Kevin will work to instill confidence and credibility in the Fed’s monetary policy,” Scott said.
Warsh has in recent months been in alignment with the president’s desire to lower interest rates.
“We can lower interest rates a lot, and in so doing get 30-year fixed-rate mortgages so they’re affordable, so we can get the housing market to get going again. And the way to do that is, as you say, to free up the balance sheet, take money out of Wall Street,” Warsh said in an October Fox Business Network interview with Larry Kudlow. “That excess money can go to Main Street and that will give us room for lower interest rates.”
Warsh was on the reported short-list of nominees for the chairmanship in 2017, when Trump ultimately nominated Powell. Warsh had been a senior economic official in the George W. Bush administration before joining the board.
Warsh was also floated for Treasury secretary before the start of Trump’s second term, a role that ultimately went to Scott Bessent.
The Financial Services Forum, which represents the eight largest U.S. banks, endorsed Warsh Friday morning.
“The Federal Reserve is critical to ensuring the economic success of our nation—Kevin Warsh is the right man for the job of chair,” FSF CEO Amanda Eversole said in a statement. “Warsh brings an unmatched wealth of experience and has a proven track record of guiding our nation’s economy through financial crisis and recovery. President Trump understands the need for strong leadership at the Federal Reserve to fulfill its dual mandate while modernizing the institution.”
Trump has prioritized trying to reduce interest rates on mortgages and credit cards, and he’s repeatedly been critical of Powell for the limited rate cuts.
“He is hurting our Country, and its National Security. We should have a substantially lower rate now that even this moron admits inflation is no longer a problem or threat. He is costing America Hundreds of Billions of Dollar a year in totally unnecessary and uncalled for INTEREST EXPENSE,” Trump posted Thursday on TRUTH Social. “Because of the vast amounts of money flowing into our Country because of Tariffs, we should be paying the LOWEST INTEREST RATE OF ANY COUNTRY IN THE WORLD.”
The uncertainty about prices created by the president’s use of tariffs – including for unclear or even dubious national security reasons – has been among the reasons cited by Powell for the pace of the interest rate moves.
Warsh may also be planning more sweeping changes at the Fed, something that will likely be a focus of his eventual Senate confirmation hearings.
“Now, regime change means new sets of policies, new way of thinking about economic growth, new understanding of what really drives inflation,” he previously told Kudlow. “It also means new personnel.”
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