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Kevin Warsh, President Trump’s pick to lead the Federal Reserve, cleared a key procedural hurdle on Wednesday, opening the way for him to succeed Jerome Powell in coming weeks amid the White House’s efforts to exert control over the central bank.
The Senate Banking Committee voted along party lines to advance Warsh’s nomination to the full Republican-controlled Senate. All 13 Republicans on the panel supported Warsh after North Carolina Sen. Thom Tillis dropped his opposition following the Department of Justice’s decision on Friday to end a criminal investigation into Powell that Tillis viewed as a threat to the Fed’s political independence.
The panel’s 11 Democrats voted against Warsh, saying they doubt his promise to set policy without regard to the president’s wishes.
Kevin Warsh testifies during his nomination hearing last week. AP
The vote comes as Powell leads what’s likely to be his last policy-setting meeting as Fed chief. The policy-setting Federal Open Market Committee is widely expected to leave the benchmark overnight interest rate unchanged in the current 3.50%-3.75% range, citing still-elevated inflation and upward pressure on prices from disruptions to global oil supplies linked to the Iran war.
There is little doubt that the Senate will confirm Warsh. The 56-year-old lawyer, financier and former Fed governor has promised “regime change” for the central bank, and Trump has repeatedly said he expects Warsh to deliver the rate cuts the president wants.
The earliest the full Senate could vote on Warsh’s nomination is the week of May 11. If the vote is held then, Warsh could be sworn in by May 15 when Powell’s leadership term ends.
It remains unclear whether Warsh’s ascension would require Powell’s exit from the Fed or whether Powell would stay on as a member of the Board of Governors. If Powell remained, Trump has threatened to try to fire him, a move that would likely face legal challenges, similar to the president’s attempt last summer to fire Fed Governor Lisa Cook.
Powell’s board seat runs through January 2028.
Fed chiefs almost always step down to make room for successors, and Powell is a lawyer whose adherence to regularity runs deep. However, Powell previously argued that the government’s criminal investigation was political intimidation and part of the Trump administration’s efforts to influence how the Fed sets interest rates.
On Friday, US Attorney for the District of Columbia Jeanine Pirro said she would not hesitate to resume her investigation “should the facts warrant doing so.” Senate Democrats Elizabeth Warren and Dick Durbin characterized that statement as a threat of “future baseless investigations” into Powell or any other Fed governor.
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