Kevin Warsh moves one step closer to becoming next Fed chair

Kevin Warsh's nomination to serve as the next Federal Reserve chair took a big step forward on Wednesday after a key committee voted to advance his nomination after a senator lifted his opposition.

Members of the Senate Banking Committee voted 13-11 to send Warsh's nomination to the full Senate for a confirmation vote that could occur soon.

Warsh, a former Federal Reserve governor who served at the central bank from 2006 to 2011, was nominated to succeed current Fed Chair Jerome Powell, whose term as chairman ends on May 15, 2026.

The nomination was held up after Sen. Thom Tillis, R-N.C., vowed to block Warsh's nomination despite supporting it because of the Justice Department's investigation into Powell's testimony on the Fed's costly renovation project, which he viewed as politically motivated.

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Tillis argued the probe undermined the independence of the central bank, and the DOJ relented as U.S. Attorney for the District of Columbia Jeanine Pirro closed her office's investigation on Friday, with the Fed's inspector general, Michael Horowitz, taking it over.

Tillis said the probe was a "serious threat to the Fed's independence, and it needed to end before I could support Kevin Warsh's confirmation."

Democrats opposed Warsh's nomination, with Ranking Member Elizabeth Warren, D-Mass., saying on Wednesday that he "will bring the president one step closer to completing his illegal attempt to seize control of the Fed and artificially juice the economy."

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Warren also criticized Warsh as a "uniquely unfit candidate" over his previous tenure as a Fed governor. She added that at his hearing, "Mr. Warsh dug the hole deeper. He had a chance to demonstrate just a teeny bit of independence from Mr. Trump, and he just couldn't do it. Mr. Warsh is a sock puppet who is so cowed by the president that he could not even say that Donald Trump lost the 2020 election."

"Look, I just disagree with everything the ranking member had to say," Tillis said after the vote in response to Warren's comments.

"It's no secret that the reason that Mr. Warsh's nomination could have been held up was because of my concern with the investigation," he explained. "I want to thank the Department of Justice for the assurances that they gave. They are going through with the appeal. The appeal has no impact on reopening the investigation. They have a matter that they want to settle, which is fine with me." 

"I've got confidence that this investigation is over," Tillis said, adding that Horowitz is "one of the best inspector generals in the whole of government" and has criminal referral power if needed. "But the fact of the matter is, this was based on two minutes of testimony, it was not criminal… Senator Warren, I get that she wants to score some political points, but she is flat wrong on every point she just tried to make."

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With the Senate Banking Committee having now advanced Warsh's nomination, the full Senate may now hold a confirmation vote in the near future. 

Depending on how quickly senators take up the nomination, Warsh could be confirmed as Fed chair in time to preside over the central bank's June policy meeting.

While Powell's term as chairman is coming to a close next month, he may choose to serve out the remainder of his term as a member of the Fed's Board of Governors, which runs until Jan. 31, 2028.

Powell will speak at a press conference on Wednesday afternoon after the Federal Open Market Committee – the Fed panel responsible for monetary policy – announces its next interest rate decision. 

Policymakers are expected to leave their benchmark rate unchanged at the current target range of 3.5% to 3.75% amid concerns over inflation.

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The presser, which will begin around 2:30 p.m. ET, is expected to be the last that Powell will lead as Fed chair.