ByWASHINGTON — Kevin Warsh will officially take the lead at the Federal Reserve after U.S. senators voted Wednesday to confirm the economist and former central bank governor to replace Chair Jerome Powell.
Senators approved Warsh 54-45 nearly along party lines. Democratic Sen. John Fetterman, D-Pa., broke ranks with his party to join Republicans in support of Warsh’s nomination. Sen. Kirsten Gillibrand, D-N.Y., did not vote.
Warsh, of Florida, takes the helm after President Donald Trump spent most of his second term haranguing and threatening to fire Powell if he did not lower interest rates.
Trump is also tangled in litigation over his firing last summer of Fed Governor Lisa Cook. The U.S. Supreme Court is currently reviewing whether Trump’s dismissal of Cook exceeded his presidential authority.
Dropped investigation
Trump’s ire for Powell escalated into a Department of Justice investigation in January that even angered some in Trump’s own party.
Sen. Thom Tillis, R-N.C., who sits on the narrowly divided Senate Committee on Banking, House and Urban Affairs, withheld his support for Warsh’s nomination until the administration dropped its probe into Powell’s handling of a multiyear renovation of the Fed’s Washington, D.C., headquarters.
The U.S. attorney’s office for the District of Columbia scrapped the investigation on April 24, but said the Fed’s inspector general would continue to examine cost overruns. The administration had accused Powell of lying to Congress about the price of renovations.
A federal judge dismissed DOJ’s criminal subpoenas into the Fed and Powell in March, citing in his order “abundant evidence that the subpoenas’ dominant (if not sole) purpose is to harass and pressure Powell either to yield to the President or to resign and make way for a Fed Chair.”
Powell’s term as chair expires Friday. He will stay on as a sitting governor on the central bank’s board.
Democratic critique
Sen. Chris Van Hollen, D-Md., criticized Warsh on the Senate floor ahead of Wednesday’s vote. Van Hollen said Warsh has done a “180-degree flip” on inflation since his time of arguing for higher interest rates as a Fed board governor during the 2008 financial crisis. The Maryland senator said Warsh is now a “super dove on interest rates.”
“Markets need confidence that monetary policy decisions are being made on the basis of economic evidence, not on the basis of political pressure or convenience,” Van Hollen said.
“That is especially important now, as prices are rising too fast and President Trump is still demanding a big cut in interest rates,” he added.
Inflation data released Tuesday showed a 3.8% increase year over year, the highest jump since 2023.
