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Trump Fed Chair Pick Kevin Warsh Endures Combative Senate Confirmation Hearing
Kevin Warsh, President Donald Trump's nominee to lead the Federal Reserve, faced sharp questioning Tuesday in a Senate Banking Committee confirmation hearing that quickly turned combative, as Democrats pressed him on political independence and Republicans probed his views on the economy and AI.
Warsh repeatedly declined to say whether Trump lost the 2020 election, a stance that drew a pointed rebuke from Sen. Elizabeth Warren, who called him a "puppet" and argued he would be unwilling to contradict the president who nominated him when it matters most. Warren framed the exchange as a test of "independence and courage," saying a Fed chair who cannot state a basic fact risks folding under political pressure.
Warsh also used the hearing to deliver a broad critique of the central bank he seeks to run. Responding to questions from Committee Chair Tim Scott, he said the Fed "failed to meet its goals" and blamed "fatal policy mistakes" in 2021 and 2022 for helping set the stage for today's inflation challenges. He called for "fundamental policy reform" and "institutional change in policymaking," including a new inflation framework, new tools and different communication practices.
Throughout the session, Warsh described the Fed as "off course," accused it of overstepping its mandate and said it had entangled itself in politics. He took a swipe at FedNow, the Fed's real-time payments system, deriding it as "Fed Yesterday." He also criticized the culture of the Federal Open Market Committee, saying he would prefer "more chaotic meetings" where participants do not arrive with "rehearsed scripts." Warsh argued that too many current and former Fed officials preannounce where they think rates should go, targeting the forward-guidance approach that has shaped Fed communications for more than a decade.
Asked how he would handle pressure of the kind Chair Jerome Powell has faced from Trump, Warsh again aimed his criticism at the institution, saying the Fed had not earned its independence in recent years. "Independence is earned by fulfilling the commitments made by the Federal Reserve," he said, adding that when those commitments are not met, "it is no surprise that politics has entered the room."
Democrats tried to push Warsh to address Trump's public attacks on the Fed, including a criminal investigation into Powell related to oversight of a Fed building renovation project and efforts to remove Gov. Lisa Cook. The Fed is challenging both matters in court. Warsh largely sidestepped the questions. Sen. Jack Reed criticized what he called Warsh's deflection, telling him a Fed chair sets the institution's "moral, ethical standards, and economic principles" and warning that spreading accountability across everyone can mean no one is accountable.
On interest rates, Warsh denied he had made any commitments to Trump. He told Sen. John Kennedy that Trump had never asked him to "predetermine, commit, fix, or decide" any rate decision, adding he would never agree to do so. Pressed again, he said: "The president never asked me to commit to any specific interest rate decision, period." Sen. Angela Alsobrooks asked whether his denial covered both implicit and explicit pressure; Warsh said Trump never instructed or suggested he should commit to any rate path. Warsh acknowledged Trump's public preference for lower rates and repeated his view that every modern president wants lower interest rates, with Trump simply more direct.
Republicans largely used their time to give Warsh room to advance his policy arguments, but Kennedy offered a notable caution on Warsh's earlier case for rate cuts tied to AI. Warsh has argued that AI-driven productivity gains could lower prices and create room for the Fed to ease policy. Kennedy warned that much of the AI productivity narrative may be market hype from people looking to sell stocks or launch IPOs. "Be careful in that area," he said. When Kennedy asked if Warsh still believed AI had made labor so productive that companies would no longer need to raise prices, Warsh rejected the framing and softened his earlier thesis, calling the current period "the most disruptive in modern economic history."
Democrats also revisited Warsh's record during the 2008–2009 financial crisis, when he served on the Fed Board from 2006 to 2011. Sen. Catherine Cortez Masto quoted a 2007 Warsh statement as subprime defaults rose: "Subprime mortgages have acquired a bad reputation in this environment, and in some cases… that's unfair." She also cited his view at the time that he saw no imminent systemic risk among large banks. "How can we believe that the economic theories you got wrong back then will now become the precise theories we need?" she asked. Warsh defended his overall record by pointing to his calls for stronger regulation of Fannie Mae and Freddie Mac. He did not directly defend the 2007 assessment, instead arguing that mispricing was widespread across financial assets.
Warsh is also expected to divest more than $100 million in financial assets if confirmed, and senators questioned his plans and the extent of his disclosures to date.
The Wall Street Journal's Nick Timiraos, often dubbed the "voice of the Fed," wrote that the key to confirmation may hinge less on vote-counting than on whether the White House or Sen. Thom Tillis blinks first over the Justice Department's criminal investigation into the Fed renovation project. Tillis has said he will not support any Fed nominee until the investigation is dropped. On Tuesday, he did not question Warsh and instead presented slides arguing the cost overruns were largely justified, citing asbestos removal, the need to build high-voltage transmission towers because the site was previously a landfill, and a 69% increase in costs from the original estimate. Tillis told Warsh, "Your qualifications are exceptional and impeccable," adding: "Let's conclude this investigation so I can support your confirmation."
Powell's term as Fed chair expires May 15. Before the hearing, Trump rejected suggestions in a CNBC phone interview that he allow Congress to oversee the renovation and end the investigation to clear the way for Warsh. "We have to find out where the money went," Trump said, at one point implying without evidence that Powell was stealing.
After the hearing, Senate Majority Leader John Thune linked Warsh's path forward to the same issue. "The sooner the government concludes this investigation and is ready to move forward and appoint a new Fed chair, the better it will be for everyone," Thune said.
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