With the term of Jerome Powell, chair of the U.S. Central Bank, the Federal Reserve (Fed), set to expire on the 15th of next month (local time), the confirmation of Kevin Warsh, a former Fed governor nominated by President Donald Trump as Powell's successor, is still being delayed.
On the 15th, the Wall Street Journal (WSJ), in an article headlined "Fed chair nominee picked by Trump sinks into an unprecedented deadlock," reported, "A confirmation hearing for nominee Warsh is scheduled, but an investigation that could block it shows no sign of abating."
The previous day, U.S. federal prosecutors currently investigating Chair Powell made an unannounced visit to the Fed's headquarters in Washington, D.C. Prosecutors under Washington, D.C., U.S. Attorney Jeanine Pirro went to the Fed building's renovation site and tried to contact officials, but left after being told that entry was not allowed without prior approval.
The New York Times (NYT) reported that the surprise visit was highly unusual and was seen as a provocative move revealing U.S. Attorney Pirro's intent to aggressively pursue the investigation into Chair Powell. The Washington Post (WP) also assessed that "it signals increased pressure on the Fed."
Prosecutors are conducting an investigation on the view that Chair Powell committed perjury before Congress in June last year regarding the increase in the Fed building's renovation expense. The prevailing assessment is that President Trump, who has clashed with Powell over whether to cut interest rates, is effectively behind the investigation.
The problem is that the more the investigation unfolds in a way that pressures Powell, the more it could provoke the Senate, which holds the power to confirm Warsh. The Senate Banking Committee is composed of 13 Republicans and 11 Democrats. A majority is required to confirm Warsh, and if all Democrats oppose, confirmation becomes impossible if even a single Republican defects.
Currently, Sen. Thom Tillis, a Republican on the Banking Committee, is signaling opposition to Warsh's confirmation until the investigation into Chair Powell is concluded. Earlier, President Trump dismissed Tillis' stance as an empty threat from a senator nearing retirement, but Tillis has not backed down and has even suggested the possibility of delaying the nominee Warsh's confirmation.
Chair Powell has said he will serve as acting chair until a successor is confirmed by Congress, in accordance with the Federal Reserve Act and precedent. He also has the authority to remain a Fed governor through 2028, separate from the chair's term. Warsh's Senate hearing is set for the 21st, but with few Senate session days left before Powell's term ends, time is tight to complete the confirmation process.
President Trump continues to press Powell. In a Fox Business interview that day, he said of Powell, "So far I have delayed firing to avoid controversy, but if he does not step down on time, I will fire him."
However, under current law, the president can remove the Fed chair and Board members only for "cause," such as grave misconduct in office. Trump appears to be looking to use the current investigation as grounds for that, but considering the precedent in which a court blocked the removal of Governor Lisa Cook, some observers say the chances of an actual dismissal are not high.
If Powell remains as a governor, it is not expected to be easy for President Trump to push the interest rate cuts he wants. Of the seven Fed governors now, three were appointed by former President Joe Biden, and Trump's own appointees are also cautious about rapid policy shifts. Given this Board makeup, some observers say that even if Warsh takes office as chair, it will be difficult for rate policy to move as the Trump administration intends.