Kevin Wash, nominated by US President Trump for the position of Federal Reserve Chair, is scheduled to appear at a hearing next Tuesday. However, all 11 Democratic members of the Senate Banking Committee have initiated a final round of pressure, demanding a delay in Wash's confirmation hearing.
The Democrats sent a letter on Thursday to the committee's chairman, Republican Senator Tim Scott of South Carolina, stating that Wash's nomination process should not proceed until the criminal investigations into two current Fed officials—Chair Jerome Powell and Governor Lisa Cook—are concluded. They called for public hearings regarding President Trump's involvement in the aforementioned investigations.
The Democrats wrote in the letter that the two investigations appear to be part of a broader effort by the Trump administration to exert control over the Federal Reserve.
They argued that advancing Wash's nomination under the current circumstances is not only inappropriate but also makes it unreasonable to believe the President's claims, assuming he has no connection to the prosecution of Chair Powell despite his numerous thinly veiled hints.
Currently, the Trump administration is embroiled in two legal disputes with the Federal Reserve. Trump has repeatedly publicly criticized the Fed, dissatisfied that its interest rate cuts have not met his expectations.
Last year, Trump announced the dismissal of Governor Cook, whose term was supposed to last until 2038, citing unsubstantiated mortgage fraud allegations against her. Cook herself has not been charged and has filed a lawsuit to retain her position; the case is now before the Supreme Court. Although the justices have not yet ruled, during oral arguments in January, they expressed significant concern about the potential impact on Fed independence if Cook's dismissal were upheld.
Simultaneously, the US Department of Justice has launched a criminal investigation into Chair Powell and his handling of a $2.5 billion renovation project for the Fed's headquarters. A federal judge recently quashed a subpoena issued by prosecutors to the Fed regarding the project, but DC US Attorney Jessie K. Liu, a long-time ally of Trump, has stated she will appeal. A surprise, unannounced visit by Liu's team to the Fed construction site this Tuesday indicates her office shows no current signs of dropping the case.
Trump endorsed the investigation on Wednesday, calling it also an investigation into Powell's "incompetence," and threatened to fire Powell if he does not resign voluntarily after his term ends. Trump initially insisted he had no connection to the investigation, but this week, White House chief economic adviser Kevin Hassett revealed that the Justice Department became involved because the President wanted an investigation into the cost overruns.
This investigation is hindering a smooth transition of power, thereby reducing the likelihood that Wash will be confirmed by the Senate before Powell's term expires on May 15. Republican member of the Senate Banking Committee, Senator Thom Tillis of North Carolina, has vowed to block any Fed Chair nominee until the legal threats against Powell are resolved.
The Republican majority on the committee is currently only 13 to 11, meaning opposition from Tillis alone could be enough to prevent Wash's nomination from proceeding to a full Senate vote.
If Wash is not confirmed in time, Powell has stated he will remain in place as acting chair, believing this action has both legal and precedential basis. However, there is growing external concern that the Trump administration will challenge this assertion and attempt to install another member of the Board of Governors in the role.
Legal experts point to two main reasons for believing Powell's interpretation would be upheld: first, the Federal Reserve Board possesses delegated authority, allowing it to designate a member to perform the chair's duties temporarily if the position is vacant; second, three separate cases last year ruled that for positions requiring Senate confirmation—a category which includes the Fed Chair—the US President does not have the authority to unilaterally appoint an acting official without Senate support.
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