Senior Republican clears path for Kevin Warsh’s confirmation as Fed chair

Unlock the White House Watch newsletter for free

Your guide to what Trump’s second term means for Washington, business and the world

Republican Senator Thom Tillis will allow Federal Reserve chair nominee Kevin Warsh to face a vote in the Senate, in a breakthrough for US President Donald Trump’s push to install his pick at the helm of the world’s most important central bank. 

Tillis’s decision comes after the Department of Justice said on Friday that it would drop its criminal investigation into Jay Powell over whether the current Fed chair misled Congress about a $2.5bn renovation of the central bank’s headquarters. 

“I have been clear from the start: the US Attorney’s Office’s criminal investigation into Chair Powell was a serious threat to the Fed’s independence, and it needed to end before I could support Kevin Warsh’s confirmation,” Tillis, the Republican senator for North Carolina, said on Sunday. He added that he took the DoJ “at its word” that the investigation was “closed”. 

“With these assurances, I look forward to supporting Kevin Warsh’s confirmation,” said the senator, who sits on the powerful Senate banking committee that stewards the nomination of top Fed officials through Congress. 

The remarks remove the biggest stumbling block to Warsh immediately succeeding Powell when the Fed chair’s second term ends on May 15. 

Tillis held a blocking vote on Warsh’s nomination moving forward to the Senate floor and said he would not support Trump’s nominee until US attorney for the District of Columbia Jeanine Pirro agreed to drop the investigation into Powell. 

The Senate banking committee said over the weekend that it would hold a vote on Wednesday on Warsh’s nomination, paving the way for a floor vote in the coming weeks. Warsh needs 51 of 100 senators to support his nomination — a hurdle he is likely to surpass now that the DoJ has said the probe into Powell has been dropped. 

Warsh, a former governor at the US central bank, is set to take over the Fed at a time when the institution faces some of the fiercest attacks in its history against its ability to set interest rates free from political pressure. 

Powell, who denies misleading Congress and claims the probe was an attempt to pressure rate-setters into cutting interest rates, has faced multiple attacks from the US president. 

Trump has labelled him a “numbskull” who has been “too late” to lower borrowing costs, and has repeatedly called for interest rates to be around zero. The Fed’s benchmark is now 3.5 to 3.75 per cent, with officials almost certain to hold borrowing costs later this week amid a surge in energy costs triggered by Trump’s war with Iran.  

The US president also attempted to fire Fed governor Lisa Cook last summer over allegations of mortgage fraud. She has denied the allegations, for which she has yet to be charged, and is contesting the decision in a Supreme Court case.  

Pirro said on Friday that she had passed the investigation to the Fed’s internal inspector-general. But she is yet to confirm a deadline for the appeal or take other actions that would close the probe with legal finality, and said in her X post she “will not hesitate to restart a criminal investigation should the facts warrant doing so”.

Tillis told NBC’s Meet the Press on Sunday morning that he had “assurances from the Department of Justice that the case is completely and fully settled”. Any DoJ appeal would only be used to “abrogate or change the ruling for administrative purposes” and “not as a basis to re-open the investigation”.

Powell had already called on the inspector-general to investigate cost overruns at the project, which now stand at around $700mn, last summer. 

Tillis said in his statement: “Only a criminal referral from the inspector-general would cause a reopening of the investigation.”