Trump Fed pick Kevin Warsh clears key Senate hurdle, teeing up final vote

Senate banking committee The vote Wednesday advanced Kevin Warsh’s nomination to chair the Federal Reserve and tied President Donald Trump’s pick for the final confirmation vote in the Republican-controlled Senate.

The vote was along party lines; All 13 Republican members voted in favor of the candidate, while all 11 Democrats voted against the candidate.

Sen. Elizabeth Warren, D-Mass., the banking panel’s ranking member, criticized Warsh before the vote and warned that his confirmation would erode the central bank’s independence from the executive branch.

“The Trump economy is in real trouble. Inflation is rising, jobs are being created. The smell of stagflation is in the air, and President Trump is despairing,” Warren said.

“Today’s vote by this committee to advance Mr. Warsh will move the president one step closer to completing his illegal attempt to seize control of the Fed and artificially stimulate the economy,” he said.

Warsh cleared that hurdle, as expected, hours before the Fed announced its final decision on interest rates—possibly for the last time under current chairman Jerome Powell.

The central bank is likely to maintain its wait-and-see strategy as sticky inflation, an apparently stable labor market and price shocks linked to the Iran war keep the prospect of further interest rate cuts at bay.

The Fed’s cautious approach has been a major source of friction between Trump and Powell, who faces a near-constant barrage of criticism for refusing to cut interest rates as much or as quickly as the president wants.

Critics and Powell himself say the pressure campaign goes beyond rhetoric.

The Justice Department has opened a criminal investigation into Powell and the Fed, allegedly focusing on cost overruns linked to a multibillion-dollar renovation of the central bank’s Washington headquarters. In his statement announcing the investigation in January, Powell accused the administration of targeting him due to the Fed’s interest rate decisions.

The investigation threatened Warsh’s chances: Banking committee member Sen. Thom Tillis, R-N.C., has vowed to block Trump’s nominee unless the Justice Department abandons its efforts.

Trump had publicly supported the investigation led by U.S. Attorney Jeanine Pirro, even though a federal judge thwarted his efforts by blocking the issuance of grand jury subpoenas.

Pirro had promised to appeal as recently as last Wednesday, but two days later he suddenly announced that the Justice Department would drop the investigation.

Tillis, for his part, said he would no longer oppose Warsh’s candidacy, but assured Trump that his selection would move forward.

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