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President Donald Trump’s next pick to lead the nation’s central bank is one step closer to securing the job, despite early fears that his nomination was doomed.
The Senate, in a test vote, confirmed Kevin Warsh to be on the Federal Reserve’s Board of Governors, the main governing body of the central bank, and a post he previously served on nearly two decades ago. The institution dictates monetary policy for the nation and has been a thorn in Trump’s side throughout his second term.
Tuesday’s successful test vote was the first step in Republicans’ quest to confirm Warsh as the next chair of the Federal Reserve. And it comes as current Chair Jerome Powell’s term at the helm comes to a close on May 15.
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The Senate is expected to wrap up confirmation of Warsh on Wednesday.
It’s a far quieter ending to a process that for months was marred by high-stakes drama, legal disputes and speculation about whether Trump’s handpicked successor to Powell could actually survive the process.
That’s because until recently, Sen. Thom Tillis, R-N.C., vowed to block any replacement pick unless the Department of Justice dropped its criminal probe against Powell.
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That probe, which ended late last month amid pressure from top Senate Republicans, was related to alleged mismanagement of renovation funds for updates of the Federal Reserve’s headquarters in Washington, D.C., and played out despite Powell’s anticipated exit this month.
Speculation swirled about whether the probe was launched as a retaliatory effort against Powell, who refused to adhere to Trump’s desires to sharply lower interest rates as the central bank navigates inflation and new economic pressures from the war in Iran.
Though Powell’s time in the spotlight as chair of the Federal Reserve is soon coming to a close, he’s not going anywhere. He told reporters last month that when his term ended, he would stay on the Board of Governors.
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“I plan to keep a low profile as a governor. There is only ever one chair of the Federal Reserve Board. When Kevin Warsh is confirmed and sworn in, he will be that chair,” Powell said.
Warsh’s vision of the Federal Reserve is one that would maintain the central bank’s independence while shifting away from delving into political and social issues.
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“The Fed must stay in its lane,” Warsh said during his testimony before the Senate banking panel last month. “Fed independence is placed at greatest risk when it strays into fiscal and social policies where it has neither authority nor expertise.”
Warsh needed every Republican vote he could get, given that Democrats have heavily scrutinized his finances and lack of financial disclosures related to wife Jane Lauder’s colossal fortune, and view him as a “sock puppet” for Trump’s economic vision rather than a force that would push back if need be.
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