The News
The biggest obstacle to President Donald Trump’s quest for a new Federal Reserve chair is his own Justice Department, according to several Republican senators whose votes he needs to confirm his nominee.
Sen. Thom Tillis, R-N.C., told Semafor on Wednesday that he plans to continue his two-month blockade of Kevin Warsh’s central bank nomination until US Attorney Jeanine Pirro abandons her investigation into Fed renovations under current Chair Jerome Powell. The GOP’s one-vote majority on the Banking Committee means Tillis alone can stop Warsh’s nomination from advancing, but he isn’t the only GOP panel member urging Pirro to cut bait.
As Pirro digs in by vowing to appeal a judge’s decision to toss her subpoenas of the central bank, Tillis dismissed the potential offramps the Trump administration has floated to shake loose Warsh’s nomination, like a congressional investigation into Powell.
“There’s only one way out of a box canyon. Only one way out,” Tillis said in an interview in his Senate office. “And I think that they just need to recognize that all they’re doing is delaying the confirmation of a good nominee.”
Warsh has begun meeting with Senate Republicans as the White House processes his confirmation paperwork, Tillis among them. The retiring North Carolinian said he had told the nominee that “my position is as important for him as it is for the current Fed chair,” since both Warsh and Powell benefit from continued defense of the Fed’s independence.
If not for Trump’s war in Iran, the stalemate over Warsh might prove the biggest thorn in the president’s side right now — but of course, reality has pulled the White House’s attention elsewhere. Nonetheless, the central bank is expected to hold interest rates steady on Wednesday rather than cut them as Trump and his allies have called for.
For the Banking Committee Republicans nudging Pirro to end her probe, it’s a simple matter of recognizing when you don’t have enough evidence.
“I think it’s time to resolve the issue and move on,” Sen. Mike Rounds, R-S.D., told Semafor. Rounds, who also met with Warsh last week, added that Warsh “clearly understands our concern in making sure that the Fed is independent.”
Said Sen. John Kennedy, R-La.: “I don’t know what evidence [Pirro] has. It’s hard for me to imagine that she has any, [given] she certainly wasn’t persuasive with the federal district court.”
The White House and DOJ did not immediately respond to requests for comment.
Tillis, in his interview with Semafor, pushed back on the idea that the Fed “won’t have a chair” once Powell’s term expires in May: “It’s not the first time that they haven’t had someone in the confirmed position.”
“They’ll pull from the bench — and they’ll move on,” Tillis added, since Fed Governor Stephen “Miran can remain there in the expired term of [former Fed Gov. Adriana] Kugler — and life will go on until 292 days expires or the investigation does.”
Know More
Tillis reiterated that he hopes Pirro ultimately decides against appealing the ruling to quash her subpoenas, which he warned would “set a very low bar for going after members of Congress” and others.
He said that other senators “share my concern with the independence of the Fed — and really, there should be a lot of people in the White House” also concerned, given that the DOJ’s investigation could have panicked investors if lawmakers hadn’t pushed back.
“If the markets actually thought that the Fed chair, and therefore Fed policy, served at the pleasure of any president?” Tillis said. “I don’t want to know [the answer], because the odds of it being a really bad place are too great.”
Seven Senate Banking Committee Republicans have implied Powell did not commit a crime when he delivered the testimony on Fed renovations that is the basis for the investigation.
The delay in Warsh’s nomination isn’t just insulating the Fed from political pressures, it’s also saving the former Fed governor from a lose-lose situation. Trump is doubling down on his calls for dramatically lower interest rates by calling for the Fed to hold an emergency meeting just as his war in Iran puts the central bank’s dual mandate to one of its toughest tests yet.
“I mean, my gosh, does anybody really think there’s going to be a rate cut today, given all the uncertainty? … And yet there are people still saying there should be,” Tillis said. “I mean, I’m not an economist, but it doesn’t take an economist to figure out what kind of monetary policy you need in the face of all the risks that we’ve had right now. That’s why independence is so important.”
Amid the blockade, the Banking Committee is working to get a nominee hearing on its schedule, Kennedy said. “But they’re going to have to resolve” the DOJ’s probe before lawmakers can vote to send his selection to the floor, he underscored, “because Senator Tillis is not going to budge.”
“Tillis is holding a full house right now” in the high-stakes Fed poker game, Kennedy said.
The View From Democrats
The Senate confirmed Warsh to the Fed by voice vote two decades ago. But congressional Democrats — including Banking Committee ranking member Sen. Elizabeth Warren, D-Mass. — share Tillis’ view that the DOJ should fold before lawmakers can confirm him.
“These are dead-enders, right?” Rep. Jim Himes, D-Conn., told Semafor of the appeal. “They are constantly faced with the choice between truth and Donald Trump — and they constantly choose Donald Trump.”
Room for Disagreement
Pirro, a longtime Trump ally, panned Friday’s decision to toss the subpoenas as “without legal authority.” She called the judge who penned it, James Boasberg, an “activist.”
“I’ll deal with the devil — I’ll take a case from the devil — if you can give me information that will lead me to possibly find a crime,” Pirro said.
Notable
- The Wall Street Journal’s editorial board argued Wednesday that “Trump would be wise to take the hint and abandon the case so his nominee, Kevin Warsh, can be confirmed.”
- Powell’s personal attorney told Pirro in January that Powell “would not leave the board when his term as chair expires if he was still under investigation,” per The Washington Post.