Divided Senate Narrowly Confirms Warsh as Federal Reserve Chairman

The Senate has confirmed Kevin Warsh as the chairman of the Federal Reserve Board to replace outgoing chairman Jerome Powell as economic conditions may make his job harder.The vote was 54 to 45 in favor of Mr. Warsh with a lone Democrat, Senator John Fetterman, joining Republicans to approve President Trump’s nominee. The vote was the closest ever for a Fed chairman.“Working families are struggling more than ever to afford basic goods. They need a central bank that will fight for them, not the President & billionaires. I am not convinced that Warsh has the willingness to do what is best for the American people. For that reason, I voted no on his nomination,” Senator Dick Durbin, the Democratic whip, said after the vote.“Kevin Warsh is battle-tested, serious, and ready to lead the Federal Reserve. President Trump made an excellent choice,” countered Senator Tim Scott, the chairman of the Banking Committee, which has oversight of the Fed. “I look forward to working with Chair Warsh to keep the Fed independent, depoliticized, and focused on affordability and opportunity for American families.”Mr. Powell’s second term as chairman ends on Friday and Mr. Warsh will take over leadership of the central bank for the next four years after having been approved Tuesday to serve as a member of the board for a 14-year term. He takes over leadership of the board of governors as prices are rapidly increasing, primarily driven by elevated gas prices due to the Iran war. A Labor Department report released Wednesday showed producer prices were up six percent from a year ago. Those numbers came out a day after another report showed consumer prices were up 3.8 percent year-over-year. Groceries, housing, and airfare price increases also accelerated in April.The Fed has traditionally sought to keep inflation at two percent but it has been above that target for five years.Mr. Warsh’s confirmation was delayed over concerns about the independence of the central bank. Its board of governors has traditionally made interest rate decisions free of political pressure but there are worries about President Trump continuing to exert pressure over desired rate cuts.Mr. Trump has badgered Mr. Powell for months, complaining about the slow pace of interest rate cuts. The elevated inflation rate is expected to make the case for interest rate cuts harder to justify at the start of Mr. Warsh’s term. “Chairman Warsh will usher in a new day at an institution that is in need of accountability, sound policy guidance, and the renewed sense of purpose to help guide our economy. His chairmanship opens the door and lays the groundwork for every American family to build and grow in the world’s greatest economy,” Treasury Secretary Scott Bessent posted on X following the vote.President Trump nominated Mr. Warsh in January but the confirmation process was slowed after U.S. attorney for the District of Columbia, Jeanine Pirro, opened a criminal probe into Mr. Powell related to cost overruns on a $2.5 billion renovation of the Fed’s headquarters at Washington.One of the allegations was that Mr. Powell lied to Congress when questioned about the overruns on the project. Mr. Powell said the investigation was simply a tool to apply political pressure on him and the reserve’s board.Senator Thom Tillis, a key Republican vote in the Banking Committee, said he would hold up the confirmation until the criminal investigation into Mr. Powell finished. Mr. Tillis said he was concerned about the independence of the central bank.Ms. Pirro ended her probe in April but warned that she would not hesitate to restart her investigation in the future. That cleared the path for Mr. Warsh’s nomination to move forward.During his confirmation hearing, Mr. Warsh said he would act independently and denied Mr. Trump had pressured him to cut rates.Mr. Powell has announced he will not leave the board of governors because of the ongoing threat of a criminal investigation. He is permitted to remain a member of the board for an additional two years after his chairmanship ends. That leaves Mr. Warsh in the potentially awkward situation of working with his predecessor still on the board.

Divided Senate Narrowly Confirms Warsh as Federal Reserve Chairman

Divided Senate Narrowly Confirms Warsh as Federal Reserve Chairman

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