Donald Trump’s nominee for US Federal Reserve chair, Kevin Warsh, faced a tumultuous hearing in Washington on Tuesday, fielding scrutiny over his wealth and his ability to operate independently of the president who appointed him.
Should he be confirmed, Warsh will hold one of the most powerful roles in the US federal government, with massive influence over the global economy and the ability to move markets.
During a hearing before the Senate banking committee, Warsh did his best to bat away questions that he argued verged too far into “politics”.
“We need to take politics out of monetary policy and monetary policy out of politics,” he told the Senate. “If I’m confirmed, the Federal Reserve should stay in its lane.”
But Warsh’s nomination has been punctured with politics long before he sat down for the hearing, something that became clear as soon as he appeared before the Senate.
Warsh had particularly heated clashes with Democrats, who zeroed in on his investments and his loyalty to Trump.
The Democratic senator Elizabeth Warren called Warsh Trump’s “chosen sock puppet” and said the Senate had a role in ensuring that the president doesn’t conduct an “illegal takeover of the Fed”.
“It’s an invitation for corruption and economic catastrophe,” Warren said.
During her questioning, Warren asked Warsh about $100m worth of assets that he disclosed last week without the specific details of some of his largest investments.
The senator asked Warsh whether the investments had any connection to “companies that are affiliated with president Trump and his family, companies that facilitated money laundering, Chinese-controlled companies, or financing vehicles set up by Jeffrey Epstein”.
“It’s a yes or no question,” she said. Warsh and Warren started speaking over each other as Warsh explained that he is working with the office of government ethics and will sell his financial assets if he’s confirmed.
Warren then pointed to comments Trump made last week in an interview with Fox Business when the president said that interest rates will be lowered once “Kevin gets in”.
“Independence takes courage,” Warren said. “Let’s check out your independence and your courage. We’ll start easy: Mr Warsh, did Donald Trump lose the 2020 election?”
“We try to take politics out of the Federal Reserve,” Warsh said, after briefly stumbling for a response.
He clarified that a point of disagreement he has with Trump is the president’s categorization of him as “central casting” – what the president says to refer to a person’s ability to appear good on the job – saying that he looks “older [and] grayer”.
Warsh’s confirmation comes at a turbulent time for the Fed, which has been under attack from Trump. The justice department has an open criminal investigation into the current Fed chair, Jerome Powell, over his handling of renovations at the Fed, a move Powell has made clear he believes was meant to intimidate the central bank.
Trump also tried to fire Fed governor Lisa Cook last summer but was temporarily blocked by federal courts.
Historically, US presidents have withheld public criticism of the Fed in respect to the independence of the institution. Economists widely agree that the independence of a central bank is essential for the stability of an economy.
Though Republicans and Democrats are bitterly divided on their support for Warsh, his pathway to confirmation remains unclear as Republican senator, Thom Tillis of North Carolina, said that he will block his nomination until Trump drops his investigation into Powell.
On Tuesday, Tillis refrained from asking Warsh any questions, praising him for his qualifications while also emphasizing why he’s blocking his nomination. In a makeshift presentation, with staffers holding posterboards behind him, Tillis explained the flaws of the justice department’s investigation into renovations at the Fed’s headquarters. At one point, Tillis pointed out that increased costs are “unfortunate but legitimate”.
“There were a variety of reasons why this building went over budget,” he said. “If we put everybody in prison in federal government that had had a budget go over, we’d have to reserve an area roughly the size of Texas for a penal colony.
“Let’s get rid of the investigation so I can support your nomination,” he added.
