Senator Tillis Lifts Hold on Kevin Warsh’s Fed Chair Nomination, Clearing Path for Trump’s Pick

Senator Thom Tillis announced he will support Kevin Warsh’s nomination as the next Federal Reserve chair after the Department of Justice ended its criminal investigation into current Fed Chair Jerome Powell. This development removes a significant obstacle for Warsh, President Donald Trump’s nominee, as Powell’s term nears its end in mid-May.

Tillis’s decision is pivotal because his previous blockade was tied to concerns over the DOJ’s investigation potentially undermining the Fed’s independence. With assurances from the DOJ that the probe is closed unless the Fed’s inspector general recommends criminal charges, Warsh’s confirmation is now expected to proceed smoothly through the Senate Banking Committee and the full Senate.

Tillis Ends Blockade After DOJ Drops Powell Investigation

Senator Thom Tillis, a Republican from North Carolina, had withheld his vote for Kevin Warsh’s confirmation until the Justice Department ceased its criminal investigation into Fed Chair Jerome Powell. The DOJ was examining alleged cost overruns related to Federal Reserve building renovations. Following U.S. Attorney Jeanine Pirro’s announcement that her office would transfer the investigation to the Fed’s inspector general, Tillis received assurances that the DOJ would not use the probe to threaten the Fed’s independence.

"I am prepared to move on with the confirmation of Mr. Warsh, I think he's going to be a great Fed chair. We were very clear that we have assurances from the DOJ that I needed to make sure they were not using the DOJ as a weapon to threaten the independence of the Fed."—Sen. Thom Tillis

Warsh’s Confirmation Nears as Senate Committee Prepares to Vote

The Senate Banking Committee, composed of 13 Republicans and 11 Democrats, is scheduled to vote on Warsh’s confirmation shortly. Tillis’s support is critical because a single Republican defection could have resulted in a deadlock, blocking Warsh’s advancement. With Tillis’s backing, Warsh’s confirmation by the full Senate appears nearly certain.

Warsh has expressed a desire for significant changes at the Fed, including altering how inflation is measured and improving communication strategies. He is also expected to advocate for interest rate cuts, though he will need to persuade other Federal Open Market Committee members amid rising energy prices driven by the conflict in Iran.

DOJ and Inspector General’s Roles Moving Forward

While the DOJ has ended its direct investigation, the Fed’s inspector general now oversees the matter. Acting Attorney General Todd Blanche confirmed that if the inspector general uncovers evidence of criminal conduct, the DOJ will investigate further. Meanwhile, U.S. Attorney Jeanine Pirro’s office plans to appeal a federal judge’s decision that quashed subpoenas issued to the Fed, though legal experts consider the chances of success slim.

Implications for Jerome Powell and the Fed’s Future

Jerome Powell, whose term as Fed chair ends in mid-May, can remain a voting member of the Fed’s board until January 2028. Despite the investigation, Powell has indicated his intention to stay on the board. His plans and the Fed’s direction under Warsh will be closely watched, especially as Warsh aims to implement a 'regime change' in monetary policy.

"If [the inspector general] uncovers evidence of criminal conduct, there is no doubt that we will investigate."—Acting Attorney General Todd Blanche

Looking Ahead: What Warsh’s Leadership Could Mean

With the path cleared for confirmation, Kevin Warsh is poised to take the helm of the Federal Reserve amid complex economic challenges. His proposed changes to inflation measurement and communication, along with potential rate cuts, signal a shift in Fed policy. However, gaining consensus within the Federal Open Market Committee will be essential, especially given geopolitical tensions affecting energy prices.