Senate Moves Forward with Warsh Nomination Amid Powell Investigation
By John Nada·Feb 13, 2026·4 min read
The Senate is advancing Kevin Warsh's nomination as Fed chair despite an investigation into Jerome Powell, highlighting tensions surrounding Fed independence.
The Senate is set to advance Kevin Warsh's nomination as Federal Reserve chairman despite a federal criminal investigation into current Chair Jerome Powell. Treasury Secretary Scott Bessent stated the urgency for the hearings, citing discussions with Senate Republicans on the Banking Committee who are prepared to proceed. This decision comes amid tensions as Sen. Thom Tillis has pledged to block Warsh's nomination until the Department of Justice concludes its probe into Powell.
Tillis's stance adds complexity to the nomination process, as he argues that the investigation is crucial for maintaining Federal Reserve independence. Powell, appointed by former President Trump, has faced scrutiny for not adhering to the administration's pressure to lower interest rates. The ongoing investigation relates to Powell's previous testimony regarding cost overruns on renovations at the Fed's headquarters, with subpoenas issued but no charges confirmed yet.
Bessent's proposal to shift the Powell investigation to the Banking Committee seems unlikely to gain traction, as Tillis remains firm in his opposition to any Fed nominee until the matter is resolved. The implications of this political standoff could significantly affect market perceptions of Fed leadership and monetary policy direction. With Tillis set to retire, the urgency for resolving this matter before his departure is heightened, and it raises questions about the future of the Federal Reserve's governance and its independence from political pressures. The unfolding situation serves as a reminder of the delicate balance between political oversight and institutional autonomy, which is foundational to market stability.
In a recent interview on CNBC's "Squawk Box," Treasury Secretary Bessent expressed confidence that the Senate Banking Committee would proceed with Warsh's nomination hearings. He emphasized that discussions with Senate Republicans indicated a readiness to advance the process, despite the ongoing investigation into Powell's conduct. Bessent underscored the importance of beginning these hearings, stating that an agreement was in place to do so. This reflects a broader urgency within the administration to solidify leadership at the Federal Reserve, particularly as the economy navigates a complex landscape of inflation and interest rates.
Sen. Thom Tillis, a Republican from North Carolina, has made it clear that he intends to block Warsh's nomination unless the Department of Justice (DOJ) concludes its investigation into Powell. His firm stance raises significant concerns about the implications of political maneuvering on the Federal Reserve's autonomy. Tillis argues that the integrity of this investigation is vital for maintaining the independence of the Fed, which is essential for fostering market stability and confidence.
The investigation into Powell, led by U.S. Attorney for the District of Columbia Jeanine Pirro, revolves around his past testimony concerning cost overruns on renovations at the Federal Reserve's headquarters. Although subpoenas have been issued, the absence of confirmed charges thus far suggests that the outcome of the inquiry remains uncertain. Bessent noted that the investigation should be allowed to run its course, pointing out that the DOJ's actions are independent of the White House's influence.
Bessent's suggestion to transfer the investigation from the DOJ to the Senate Banking Committee was met with skepticism, particularly from Tillis, who reiterated his commitment to blocking any Fed nominee until the investigation is resolved. This position creates a potential impasse, as Tillis has stated unequivocally, "I have no intention of allowing any Fed board nominee to move forward out of committee and to be confirmed until this matter is settled." His comments reflect a broader concern among some lawmakers regarding the pressures that may be exerted on Federal Reserve leadership by outside political forces.
The situation surrounding Powell's investigation and Warsh's nomination highlights the intricate interplay between politics and central banking in the United States. Powell's reluctance to lower interest rates as aggressively as the Trump administration desired has already put him under scrutiny, and the current investigation only compounds these challenges. The Federal Reserve's ability to operate independently is crucial, especially as it navigates through economic turbulence and attempts to manage inflationary pressures.
As Tillis prepares to retire at the end of his term, the urgency to resolve the standoff before his departure becomes even more pronounced. His retirement raises questions about the future dynamics of the Senate Banking Committee and how the nomination process for Federal Reserve leaders may be influenced by new members. The outcome of this situation could set important precedents for how future nominees are treated in the context of ongoing investigations and political pressures.
The delicate balance between political oversight and institutional autonomy remains a cornerstone of the Federal Reserve's operations. As the Senate moves forward with Warsh's nomination amid the backdrop of Powell's investigation, the implications for the Fed's independence and the broader economic landscape are significant. This situation serves as a crucial reminder of the challenges faced by central banks in maintaining their integrity while being subject to the political winds of Washington.