Democrats: "Investigate the Fed First"... Pressure Mounts to Delay Warsh Hearing

New York, The Financial News – Reporter Lee Byung-chul.U.S. President Donald Trump’s attempt to tighten his grip on the Federal Reserve System (Fed) is escalating into a direct clash with lawmakers. All Democratic members of the United States Senate Committee on Banking, Housing, and Urban Affairs are now demanding that the confirmation process for Kevin Warsh, the nominee for the next Fed chair, be put on hold.
According to The New York Times (NYT) on the 16th (local time), 11 Democratic senators on the committee sent a letter to Committee Chair Tim Scott, urging him to postpone Warsh’s confirmation hearing. They argued that no confirmation proceedings should move forward until the criminal investigations into Jerome Hayden Powell, the current Fed chair, and Fed Governor Lisa Cook are completed.
The Democratic Party of the United States (Democratic Party) went further, openly condemning the investigations as part of the Trump administration’s broader effort to bring the Fed under political control. The senators stated, "These two investigations appear to be part of a broader attempt to seize control of the Fed," adding, "Forcing through a confirmation under these circumstances would not only be inappropriate, but it would also be unreasonable to believe that the president has not interfered in the investigations."
At the heart of the conflict is a two-pronged pressure campaign on the Fed. The Trump administration has repeatedly criticized the Fed for being reluctant to cut interest rates, and is now pursuing two separate legal battles at the same time. Trump sought to remove Governor Lisa Cook, whose term runs until 2038, citing alleged mortgage fraud, and Cook responded by filing suit, sending the case to the Supreme Court of the United States (U.S. Supreme Court).
On top of that, the Department of Justice (DOJ) has launched a criminal investigation into Jerome Powell over the US$2.5 billion cost of remodeling the Marriner S. Eccles Federal Reserve Board Building. A federal judge quashed a related subpoena, but the United States Attorney's Office for the District of Columbia has announced it will appeal and is pressing ahead with the probe. Prosecutors recently visited the construction site, signaling their determination to pursue the case.
These developments are directly affecting the selection of the next Fed chair. With Powell’s term set to expire on May 15, growing opposition within the Republican Party (GOP) is increasing the likelihood that Kevin Warsh’s confirmation will be delayed. Republican Senator Thom Tillis has already declared that he will block all Fed appointments until the legal pressure on Powell is resolved.
The makeup of the Senate Banking Committee is another key factor. Republicans hold only a narrow 13-to-11 majority, so the defection of even a single member could be enough to halt the confirmation process.
If Warsh is not confirmed in time, there is growing speculation that Powell could remain as acting chair. Powell’s position is that, under law and precedent, he can continue to serve in an acting capacity, but some observers warn that the Trump administration may refuse to recognize this and attempt to install someone else.



pride@fnnews.com Reporter Lee Byung-chul Reporter