Trump would decide whether to investigate Fed pick Warsh over refusal to cut rates: Bessent

Treasury Secretary Scott Bessent on Thursday refused to rule out a criminal investigation into President Donald Trump’s nominee to lead the Federal Reserve, Kevin Warsh, if Warsh refuses to cut interest rates.

Sen. Elizabeth Warren of Massachusetts, the top Democrat on the Senate Banking, Housing and Urban Affairs Committee, questioned Bessent about Trump joking over the weekend that he would sue Warsh if he didn’t lower interest rates to the president’s liking. Wall StreetJournal.

“I think it’s a joke, but just in case, this should be an easy one, Mr. Secretary: Can you promise right here and now that Trump’s Fed nominee, Kevin Warsh, will not be sued, will not be investigated by the Justice Department, unless he cuts interest rates exactly the way Donald Trump wants?” Warren asked.

“That’s up to the president,” Bessent said as the questioning turned into conversation.

U.S. presidents generally leave interest rate decisions to the Fed, creating a metaphorical firewall between the independent board and the White House.

Bessent’s testimony before the Senate committee was his second appearance on Capitol Hill in as many days. He was grilled by Democrats during a controversial hearing of the House Financial Services Committee on Wednesday. Democrats there pressed Bessent on tariffs and inflation, regulation of cryptocurrencies and, on a hot-button issue, the independence of the Federal Reserve.

Trump has targeted Federal Reserve Chairman Jerome Powell in recent months for his refusal to lower interest rates as per the president’s wishes. On January 11, Powell announced that he was the subject of an unprecedented investigation by the Justice Department into cost overruns in renovating the Federal Reserve headquarters.

Trump’s critics have characterized the investigation, based in part on Powell’s testimony to the Senate banking committee last year, as a thinly veiled attempt to strengthen the independent central bank.

Committee Chairman Tim Scott, R.S.C., said in testimony this week that he did not believe Powell committed a crime. And Sen. Thom Tillis, R-N.C., a member of the committee, has vowed to block Warsh’s nomination unless the investigation into Powell is stopped. Powell’s term as chairman ends in May. Meanwhile, Trump doubled down on the investigation earlier this week.

Warren and her Democratic colleagues on the committee also called on Scott to delay Warsh’s nomination until investigations into Powell and Federal Reserve Board Governor Lisa Cook, who is being investigated for alleged mortgage fraud, are completed.

“Donald Trump has been trying to take over the Fed for months,” Warren said in a statement ahead of Thursday’s hearing. he said. “He threatened to fire Jerome Powell. He started a phony criminal investigation against him. He started a phony investigation to fire Lisa Cook, and now he wants to appoint his man at the Fed who will do exactly what he says.”

“This is a takeover,” Warren continued.