The Patriot Post® · Kevin Warsh Faces Senate Banking Committee
President Donald Trump’s choice to fill the position of the soon-to-be outgoing chair of the Federal Reserve, Jerome Powell, is Kevin Warsh, a millionaire who came from a middle-class upbringing and made his wealth on Wall Street.
In a confirmation hearing before the Senate Banking Committee on Tuesday, Warsh comported himself well. He deftly avoided falling for any of the Democrats’ “gotcha” questions, specifically in light of Trump’s negative relationship with Powell.
Senator Elizabeth Warren, for example, hammered Warsh over whether he would stand up to pressure from Trump. As she put it, “The Senate should not be aiding and abetting Mr. Trump’s takeover of the Fed by installing his sock puppet.”
For his part, Warsh said during his opening statement, “I am equally committed to working with the Administration and Congress on non-monetary matters that are part of the Fed’s remit.”
Regarding the Democrats’ repeated references to the Fed’s need to remain independent and nonpolitical, Warsh wisely observed that presidents have long expressed their preferences for the Reserve, which “all tend to be in the same direction.” It’s shocking, I know, but presidents want the best economic outlook while they’re in office.
Few have serious objections to Warsh based on his résumé. The man clearly has the experience and know-how to do the job. The Democrats are objecting because it’s all part of their own anti-Trump political calculus: Anything and everything Trump wants or directs is automatically bad.
However, it’s Trump’s targeting of Powell that could throw a monkey wrench into Warsh’s confirmation process. North Carolina Republican Senator Thom Tillis, who holds a seat on the 24-member Banking Committee, has vowed to vote against Warsh’s confirmation until the Justice Department drops its investigation into Powell.
As Tills plainly put it, speaking to Warsh, “You have extraordinary credentials. They’re impeccable.” He then added, “The problem I have is where we are right now.” Noting the DOJ’s probe into Powell with regard to cost overruns on the Fed’s building renovation, Tillis stated, “The problem that I have here is that we had some U.S. attorney with a dream or assistant U.S. attorney thinking it would be cute to bring Chair Powell under an investigation just a few months before the position was going to be open.”
Tillis then advised, “Let’s get rid of this investigation so I can support your confirmation.”
But here’s the rub: Trump has shown no indication that he wants to back down from having Powell probed. It would seem that the president has taken Powell’s refusal to act quickly to cut interest rates as a personal insult.
Last month, a judge threw out subpoenas sent to the Fed by U.S. Attorney for DC Jeanine Pirro. Powell is accusing the Trump administration of intimidation tactics; meanwhile, Pirro has shown no signs of backing down, sending prosecutors from her office to visit the Federal Reserve headquarters building unannounced.
What would work best right now would be for the DOJ to drop its probe of Powell, which would in turn ensure that Trump gets Warsh as his new Fed chair. This would serve both Trump and the nation writ large, as Trump, whose favorability rating is dropping, could avoid promoting another investigation that ends up going nowhere, and Warsh could quickly set to work getting rates more in line with the president’s agenda.
What will benefit Republicans in the midterms is an economy that is rapidly growing, as well as lower interest rates to make life more affordable. Continuing to fight the outgoing chair of the Federal Reserve not only looks unfocused and vindictive, but it further endangers the GOP’s majority in Congress.
President Donald Trump has bigger fish to fry.