Warsh's heated Fed hearing

Kevin Warsh spent Tuesday trying to convince senators he would run the Federal Reserve without taking rate orders from President Donald Trump. (banking.senate.gov; pbs.org) At the April 21 hearing before the Senate Banking Committee, Warsh said, “The president never once asked me to commit to any particular interest rate decision” and added that he would be “an independent actor” if confirmed. (pbs.org; politico.com) Trump undercut that message hours earlier on CNBC, saying he would be “disappointed” if Warsh did not cut rates “right away” after Senate approval. Forbes and Reuters reported the comment before and during the hearing. (forbes.com; usnews.com) The fight centered on Federal Reserve independence, the long-standing idea that the central bank sets interest rates based on inflation and employment data, not White House demands. Warsh told senators that independence is “critical” but “has to be earned.” (politico.com; bankingjournal.aba.com) That question has become more urgent because Trump has spent months attacking current chair Jerome Powell and publicly calling for sharply lower borrowing costs. Politico said Trump had pushed for rates as low as 1 percent or less, while CNBC said Democrats used the hearing to test whether Warsh would resist that pressure. (politico.com; cnbc.com) Democrats also pressed Warsh on his wealth and personal finances. CNBC reported that Warsh, a former Morgan Stanley banker and Fed governor, would be the wealthiest Fed chair if confirmed, and Forbes said his assets exceed $100 million. (cnbc.com; forbes.com) One of the sharpest exchanges came when Sen. Ruben Gallego, an Arizona Democrat, told Warsh, “someone here is lying,” after citing earlier reporting about Trump’s expectations on rates. Warsh stuck to his denial that Trump had demanded a pledge. (pbs.org; cnbc.com) Republicans gave Warsh steadier backing. Senate Banking Chair Tim Scott called him “battle tested,” and Sen. Dave McCormick said the central bank is “in need of repair,” according to Politico. (politico.com) Warsh, 56, served on the Fed’s Board of Governors after President George W. Bush appointed him in 2006, then left in 2011 after the financial crisis. He was also a finalist for the Fed chair job in 2017 before Trump picked Powell instead. (forbes.com) His path is still not clear. Forbes reported that Sen. Thom Tillis has said he will block the nomination in committee until the Justice Department drops its investigation of Powell, leaving Warsh’s confirmation tied not just to interest rates, but to the wider fight over how much political control the Fed should face. (forbes.com)