Tillis clears path for Warsh confirmation as new Federal Reserve chief

Sen. Thom Tillis (R., N.C.) said Sunday he was satisfied that the Justice Department ended its criminal investigation into Federal Reserve Chair Jerome H. Powell, clearing the way for Republicans to advance President Donald Trump’s pick to be the next leader of the central bank, Kevin Warsh.

“I am prepared to move on with the confirmation of Mr. Warsh,” Tillis said on NBC’s Meet the Press.

Tillis had previously criticized the probe as an effort to pressure Powell to resign early and to erode the Fed’s ability to set interest rates free from White House interference. On Sunday, Tillis said he had assurances from officials that the case would be reopened only if the Fed’s internal watchdog found evidence of criminal wrongdoing.

Tillis’ announcement removed the last major obstacle to Warsh’s confirmation, setting up what could be a decisive week for the Fed’s future leadership. The Senate Banking Committee is scheduled to vote Wednesday on whether to advance the nomination to the full Senate.

“He is an outstanding nominee, and it is time for the Federal Reserve to move beyond this distraction and return its full attention to its mission,” Tillis said in a statement after his interview.

U.S. Attorney Jeanine Pirro said Friday that she was closing her probe into Powell and the Fed’s $2.5 billion headquarters renovation, though she said the inquiry could resume if the central bank’s inspector general uncovered evidence of wrongdoing. Pirro said she had asked the Fed’s inspector general to review cost overruns connected to the renovation — a probe the watchdog had already been conducting since last summer at Powell’s request. Tillis had blocked Warsh’s nomination until Pirro stood down on the investigation, which he called “bogus” and which a federal judge, Chief U.S. District Judge James E. Boasberg of D.C., concluded was an abuse of Justice Department power. Republicans hold a 13-11 majority on the Banking Committee, meaning a single defection could still sink Wednesday’s vote.

On Sunday, Tillis said he was not concerned that the Justice Department might appeal Boasberg’s ruling quashing a pair of grand jury subpoenas in the case. He said he had been assured that any appeal would be over “legal principles,” not an attempt to reissue the subpoenas.

Powell’s term as Fed chair expires May 15, but he is eligible to remain on the board until 2028. Trump had threatened to try to fire him if he does not depart the board “on time” — a move that would inject extraordinary volatility into financial markets and the broader economy if Warsh’s confirmation continues to stall. Tillis said he expected Powell might stay on the Fed board until the appeal is “fully settled,” which “could be a lengthy process.”

“Hopefully not,” he added.

Trump’s drive to install an ally atop the Fed has drawn fierce Democratic opposition and alarm among economists and former officials who view it as a potential threat to the central bank’s independence.

Democrats showed no sign of backing down. Sen. Elizabeth Warren of Massachusetts, the Banking Committee’s top Democrat, called Warsh “President Trump’s sock puppet” early Saturday after the GOP-led Senate banking panel scheduled the vote to advance Warsh to the Senate floor. She accused Republicans of either naivety or deliberate dishonesty in moving to confirm him despite a White House characterization of the Powell probe as ongoing.

A separate Justice Department investigation targeting Fed governor Lisa Cook also remained active, Warren noted.

“No Republican claiming to care about Fed independence should support moving forward the nomination of Kevin Warsh,” she said.

Warsh, who pledged independence from the White House on interest rates during his confirmation hearing last week, pushed back on Democratic characterizations of him as a “sock puppet” for the president.

Warsh also said Trump never asked him to commit to rate cuts — “he didn’t ask for it, he didn’t demand it, he didn’t require it” — even as Trump has said he would be disappointed if Warsh doesn’t move immediately to lower rates upon confirmation.