The Senate Banking Committee's senior Republican, Tim Scott, stated on Tuesday that the committee will hold a confirmation hearing next week for Kevin Warsh, President Trump's nominee for Federal Reserve Chair. Scott indicated in an interview that the hearing will take place next week with Warsh in attendance, focusing on discussions about the economy, price stability, inflation, and the independence of the Federal Reserve. While Scott did not specify the exact date, reports suggest the hearing is scheduled for April 21.
According to sources on Monday, Warsh has submitted the necessary financial disclosure documents to the Senate, marking a significant step forward in the confirmation process. The submission of financial information is a prerequisite for initiating Senate hearings. A previously scheduled hearing for this week was postponed due to delays in document submission. Insiders noted that once the Senate Banking Committee receives Warsh's written responses to their inquiries, the hearing arrangements could be finalized as early as next week.
Scott also anticipates that the Department of Justice will conclude its criminal investigation into a renovation project at the Federal Reserve within the coming weeks, potentially removing a major obstacle to Warsh's confirmation. Scott expressed confidence that Senator Tillis, who has previously voiced opposition, would then vote in favor. When questioned about specific details regarding the DOJ's intentions, Scott stated he had no further information.
Republican Senator Thom Tillis from North Carolina has praised Warsh but maintains that he will not support the confirmation until the DOJ investigation is resolved, citing concerns that the probe threatens the Fed's independence. Following Scott's comments, Tillis reaffirmed this position on Tuesday.
This high-stakes hearing will serve as a platform for senators from both parties to scrutinize Warsh's stance on economic and monetary policy. Warsh, a former Federal Reserve Governor and economic policy advisor to Trump, faces particular investor scrutiny over how he will balance competing pressures: calls from the Trump administration for significant reductions in borrowing costs against economic conditions that currently do not warrant rate cuts, at least in the short term.
A surge in energy costs driven by conflict in the Middle East has disrupted the U.S. economic outlook, heightening market concerns about persistent inflation and weaknesses in the labor market. This has introduced greater uncertainty into the Fed's policy path. In this context, Fed policymakers have generally signaled a preference for maintaining stable interest rates while assessing the impact of the conflict.
Given the Trump administration's repeated criticisms of the Fed and inflation remaining above the central bank's target for over five years, any missteps in addressing interest rate questions could undermine the credibility of a Fed under Warsh's leadership. He may also face questioning regarding his established plan to reduce the size of the Fed's $6.7 trillion balance sheet and his views on banking regulation.
A survey from early March showed that 69% of economists believed Warsh would be committed to the Fed's 2% inflation target if appointed Chair. This figure was surprisingly low, considering Fed policymakers are typically expected to be fully dedicated to this goal. Notably, even if Warsh performs flawlessly in the committee hearing, the path to Senate confirmation remains uncertain as long as the DOJ investigation continues. Beyond Scott's comments on Tuesday, there is no indication that the Trump administration is abandoning the probe. A federal judge recently quashed a subpoena issued as part of the investigation and subsequently denied a DOJ request to reconsider the ruling. U.S. Attorney Jeanine Pirro has pledged to appeal the decision.
Although Jerome Powell's term as Fed Chair expires on May 15, his term as a Board Governor extends until January 2028. Conventionally, outgoing Fed Chairs resign from the institution entirely after their leadership term ends. However, Powell has stated he will remain until the DOJ investigation is resolved "in a transparent and final manner." Besides Tillis, other Republican senators have criticized the DOJ investigation. Tillis has stated he does not believe Powell committed any crime, while North Dakota Senator Kevin Cramer called the investigation a "waste of time."
Furthermore, if Warsh is not confirmed by May 15, Powell has indicated his intention to serve as interim Chair and potentially retain his other key role as Chairman of the Federal Open Market Committee (FOMC), which sets interest rates. This suggests that the Trump administration's continued pursuit of the investigation could not only delay Warsh's confirmation but also allow Powell to maintain significant control over monetary policy. Nevertheless, Trump has stated he is not concerned about a potential delay in Warsh's nomination, remarking in February, "If it happens, it happens."
