:max_bytes(150000):strip_icc()/GettyImages-2258500660-d82f522fb545434881cc0af7dcd40d51.jpg "Trump’s Pick For Fed Chair May Not Be Approved by the Senate—And Not For the Reasons You May Think")
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Key Takeaways
- Senator Thom Tillis of North Carolina, a Republican, has threatened to block President Donald Trump’s pick to lead the Federal Reserve.
- Tillis objects to the Justice Department’s investigation into current Fed Chair Jerome Powell.
- Tillis is not seeking re-election in November, so he could hold up the nomination for less than a year.
A key Republican lawmaker likes President Donald Trump’s pick to head the Federal Reserve—and is threatening to block his appointment anyway.
While Trump has chosen his nominee for the chair position, former Fed Governor Kevin Warsh must still be approved by the Senate. North Carolina Senator Thom Tillis, a member of the Senate’s influential banking committee, said Friday he will oppose Warsh’s nomination in protest of the administration’s efforts to strongarm the central bank’s current leadership.
Trump has repeatedly criticized current Fed Chair Jerome Powell and demanded that the Fed sharply lower interest rates. Earlier this month, the Justice Department began investigating Powell, though Trump said he had no knowledge of the inquiry.
The Justice Department investigation of Powell is focused on his testimony to the Senate last summer about a renovation project at the Fed’s headquarters. Powell and his supporters, who include lawmakers and former Fed leaders, have criticized the investigation as a pretense to pressure the Fed to lower rates.
“Kevin Warsh is a qualified nominee with a deep understanding of monetary policy,” Tillis said in a statement. “However, the Department of Justice continues to pursue a criminal investigation into Chairman Jerome Powell based on committee testimony that no reasonable person could construe as possessing criminal intent. Protecting the independence of the Federal Reserve from political interference or legal intimidation is non-negotiable.”
What This Means For The Economy
Should other lawmakers join Tillis, it could throw a cloud of uncertainty on the leadership of the Federal Reserve, which plays an important role in the economy and financial system. That could fuel broader uncertainty in the economy.
Tillis has spoken out against the Trump administration’s recent legal threats against Powell, which he says have called into question the Federal Reserve’s independence from White House control. Congress established the Fed to resist political influence so presidents would not be able to force the Fed to set interest rates too low, which could stoke inflation. If approved by the Senate, Warsh would take office in May when Powell’s term ends.
Tillis’s opposition could prove to be more of a speedbump than a roadblock. Tillis is not running for re-election in November, so his days in office are numbered.
Speaking at the White House Friday, Trump said Warsh’s would get the Senate’s approval, eventually.
“If he doesn’t approve, we’ll just have to wait till somebody comes in that will approve,” Trump said of Tillis.
