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Top Wall Street executives are increasingly confident that a standoff over Kevin Warsh’s nomination to become Federal Reserve chair will be resolved before Jerome Powell’s term ends next month, according to interviews and reporting.
Sen. Thom Tillis (R-NC) offered President Trump a compromise that would end a Department of Justice investigation into whether Powell misled Congress regarding the $2.5 billion price tag for the Fed’s new headquarters, known as the “Taj Mahal On The Mall.” Tillis, a ranking member of the Senate Banking Committee, said the investigation is “bogus” and has vowed not to vote to advance Warsh’s nomination to the full Senate if the probe continues.
The truce Tillis proposed, which also has the backing of Senate Banking Chair Tim Scott, would shift responsibility for reviewing Powell’s testimony on the headquarters renovations to the Senate Banking Committee. If the committee finds wrongdoing, it would make a referral to the DOJ.
Executives interviewed by On The Money said they are betting a deal is approaching. One government affairs executive at a major bank said: “There will be some off ramp.” Another person with ties to the Trump White House said Trump could be open to an agreement if Powell leaves the central bank completely after his term as chair ends.
Powell has the right to remain as a Fed governor until January 2028. The White House, however, has continued to emphasize confirming Warsh. A White House spokesman said the administration remains focused on working with the Senate to swiftly confirm Warsh as the next Fed chair.
Powell’s term ends May 15. Tillis floated the compromise amid White House pressure for him to vote Warsh’s nomination out of the Senate Banking Committee so the full Senate could confirm Warsh, presumably on a party-line vote.
Tillis declined to comment on whether he discussed the matter with Trump. In a CNBC interview on Tuesday, Trump said: “We have to find out why a small building costs close to $4 billion. It’s not finished, by the way. They have a long way to go.”
Wall Street executives have urged the White House to drop the DOJ investigation, citing concerns about potential market disruption given broader geopolitical tensions, including the conflict with Iran and its effect on inflation.
Tillis has argued that the DOJ probe sets a dangerous precedent by involving the executive branch in the governance of the central bank—an institution created by Congress to operate independently from politics while managing the nation’s money supply.
Tillis said he believes Warsh—described as a former Fed governor, Wall Street banker, and currently an academic at Stamford University—is well qualified for the role. But he said that barring what he called a “good off-ramp,” he will continue to withhold his vote to advance the nomination.
If Tillis remains a no-vote, Powell could stay at the Fed as chair indefinitely, serving in a “pro tem” capacity.
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