It was not supposed to be this messy.
Now there’s ugly crying on both sides of the Senate as lawmakers take sides in the political power struggle between President Donald Trump and Federal Reserve Chair Jerome Powell escalating through the halls of Congress.
At the center are the limits of partisan executive power on the independent central bank.
But the most pressing current issue on Capitol Hill’s bingo card — other than the impact of the Iran War on the midterms — is Fed Chair nominee Kevin Warsh’s confirmation hearing before the Senate Banking Committee slated for April 21.
This comes after Trump doubled down on his repeated efforts to force “incompetent” Federal Reserve Chair Jerome Powell to resign, saying in a television interview April 15 that he’ll fire him if Powell doesn’t resign by a new May 15 deadline.
The president also signaled that he would not drop the Department of Justice criminal probe of Powell for unsubstantiated allegations of lying to Congress over the costs of the $2.5 billion restoration of Fed headquarters.
Three DOJ employees from U.S. Attorney Jeanine Pirro’s office, including two prosecutors, attempted to tour the construction site surrounding the Marriner S. Eccles Federal Reserve Board Building in a surprise visit on April 14, The Wall Street Journal first reported.
Pirro is reportedly planning to appeal a federal judge’s decision last month to throw out a pair of subpoenas issued to Powell because the investigation appeared to “harass and pressure” the Fed Chair to bend to Trump’s demands to lower interest rates or step down as the central bank’s leader.
Senate GOP leaders including Majority Leader John Thune, R-SD, are said to be scrambling to find a way to clear the path for Warsh, a 56-year-old former Fed Governor, to be approved by committee and then the full Senate.
Meanwhile, Democrats are amping up efforts to nip it in the bud.
Trump-Powell power struggle divides Senate GOP
The unprecedented criminal probe of a sitting Federal Reserve chair has prompted one Republican member of the Senate Banking Committee, outgoing North Carolina Sen. Thom Tillis, to vow to delay Warsh’s nomination process until the Powell investigation is shut down permanently.
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Without Tillis, who says he supports Warsh otherwise, the nomination is effectively dead in the water.
Thune and other top Senate Republicans are pushing the Trump administration publicly and privately to end its investigation into Powell.
“I think it’s in everybody’s best interest to wrap up the investigation,” Thune said April 15. “I’ve said that before, it would be better if it winds down.”
Photo by ANNABELLE GORDON on Getty Images
Senate Democrats want Warsh’s Fed Chair hearing canceled
Meanwhile, the 11 Democrats on the Senate Banking Committee sent a letter April 16 to Senate Banking Committee Chairman Tim Scott, R-S.C., requesting the Warsh hearing be delayed until the Powell probe and that of Fed Governor Lisa D. Cook are dropped.
“Both investigations appear to be part of the Trump administration’s broader effort to take control of the Fed,” the Democrats wrote in the letter reviewed by The New York Times.
The letter also said it would not only be “inappropriate” to move forward with Warsh’s nomination under the current circumstances, but also “unreasonable to take the president at his word and assume — despite all of his thinly veiled assertions to the contrary — that he is uninvolved in the prosecution of Chair Powell.”
Warren blasts Fed Chair nominee Warsh over financial ‘holes’
Massachusetts Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, said April 16 that she believes the holes in Warsh’s financial disclosures of his more than $100 million in assets do not pass muster with Senate ethics rules, thus adding more reasons that his confirmation hearing should be delayed.
“This hearing should not go forward, now, until these financial disclosures are resolved, until he is in compliance with ethics rules,” Warren told reporters after meeting with Warsh, who would be the wealthiest Fed Chair in U.S. history if confirmed.
Related: Fed Chair nominee discloses stunning vast wealth in court filings
Warsh’s filing, as I reported April 14, included gaps in disclosures on assets held “due to pre-existing confidentiality agreements.” He pledged to divest them to conform with central bank ethics rules if confirmed.
Reuters reported that Warren said without those details that it was not possible to understand Warsh’s “entanglements,” adding Warsh was explicit in their discussion that he would not hand over more documents.
“The whole point of the disclosure is not only to know about his entanglements and things, but to be able to check to see that they are unwound by the time he becomes a Fed governor,” Warren said.
“The Fed has already suffered multiple ethics scandals because Fed governors have had conflicts of interest,’’ she told reporters.
How the Fed power struggle could play out
All of this dramatic meshugana could mean that Warsh’s nomination is not approved by May 15, Powell’s last day as chair of the policymaking Federal Open Market Committee.
Powell’s term on the Board of Governors expires in 2028 and he has said he will not leave the central bank until any and all criminal investigations against him are dropped.
Powell also said that if Warsh is not sworn in by May 15 that he would continue to serve as FOMC chair pro tem, which has happened in years past at the central bank.
But Trump’s threat to fire Powell by May 15 would effectively kill that idea. However, federal law prohibits the removal of a Fed governor except for “cause.”
Scott told Fox Business April 14 that he expected the Tillis situation to be resolved in the near future thus clearing the way for Warsh’s nomination to reach the full Senate for approval.
But Scott did not divulge additional details as to how this might actually happen.
He has not publicly responded to the Democrats’ request, their second attempt to stall the hearing.
Powell claims Fed probe is a pretext for lower interest rates
Powell and others, including top economists, lawmakers and Wall Street leaders, say the DOJ probe is a pretext by the administration to bully Powell into lowering interest rates.
Trump, throughout his second administration, has blasted Powell for not slashing interest rates to 1% or lower over the last 14 months.
He attacked Powell as a “moron,” and other personal and professional insults (“Too Late”).
Pirro, a close Trump ally of decades, is said to be gunning for Pam Bondi’s old job as Attorney General.
Hence she is doing her best to make Trump happy by going after his perceived political enemies and weaponizing her office and employees in the process.
By the way, the Supreme Court ruling on whether Trump can fire Cook over unsubstantiated allegations of mortgage fraud is expected any day.
That ruling could sway Trump’s May 15 threat into uncharted territory in American political history.
Related: Trump escalates threat to fire ‘incompetent’ Fed Chair Powell
