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Warsh Nomination Hits Immediate Resistance in Senate

Kevin Warsh’s path to becoming the next Chair of the Federal Reserve is already facing serious headwinds on Capitol Hill.

Democrats on the Senate Banking Committee formally asked Committee Chair Tim Scott to halt any action on Warsh’s nomination until ongoing Justice Department investigations involving current Fed Chair Jerome Powell and Governor Lisa Cook are completed. President Donald Trump nominated Warsh last week to succeed Powell when his term ends in May.

Their demand, combined with opposition from at least one Republican senator, could effectively stall the nomination before it ever reaches the full Senate.

The Banking Committee is made up of 24 members 13 Republicans and 11 Democrats. That slim margin means a single Republican joining all Democrats would create a deadlock, preventing Warsh’s nomination from advancing out of committee.

That scenario now looks increasingly likely.

DOJ Investigations Cast a Shadow Over the Process

At the center of the controversy are two separate Justice Department probes targeting sitting Federal Reserve leaders.

Powell is under investigation for potential criminal wrongdoing tied to cost overruns connected to the renovation of the Federal Reserve’s headquarters. Separately, Governor Lisa Cook is being investigated over allegations of mortgage fraud. Cook has also been publicly targeted by President Trump, who previously attempted to remove her from her post.

Democratic senators argue that moving forward with Warsh’s nomination while these investigations remain open would undermine the independence of the central bank.

In a sharply worded letter led by ranking member Elizabeth Warren of Massachusetts, the Democrats warned that the situation amounts to an unprecedented attempt by the administration to exert control over the Federal Reserve through criminal prosecutions.

They urged Chair Tim Scott to delay any proceedings, writing that it would be fundamentally inappropriate to allow Trump to select the next Fed chair while the Justice Department is actively investigating two current members of the Federal Reserve Board.

The lawmakers described the investigations as politically motivated and said confirming a new chair under these circumstances would set a dangerous precedent.

One Republican Holdout Could Freeze the Nomination

While Democrats alone do not have enough votes to block Warsh in committee, they now have crucial support from Sen. Thom Tillis of North Carolina, a Republican member of the Banking Committee.

Tillis has publicly committed to blocking any Federal Reserve nominations until the Powell investigation is fully resolved.

Following Warsh’s nomination, Tillis reiterated his stance, saying he would oppose the confirmation of any Fed nominee including for chair until the Department of Justice completes its inquiry into Powell in a transparent manner.

With Tillis holding firm, Warsh’s nomination is effectively stuck. If Tillis votes no alongside all 11 Democrats, the committee would be evenly split, preventing the nomination from moving forward.

In practical terms, that gives Tillis veto power over the process.

Democrats Warn of Threat to Fed Independence

Democratic senators framed their opposition in broader institutional terms, emphasizing the importance of safeguarding the Federal Reserve from political pressure.

They argued that allowing a nomination to proceed while active criminal probes target current Fed leaders risks eroding public confidence in the central bank and destabilizing financial markets.

The group stressed that the Fed’s credibility depends on its independence from the White House and law enforcement leverage. Moving ahead now, they said, would make it appear as though the administration is clearing the way for its preferred candidate by sidelining existing officials.

Their letter to Scott characterized the situation as extraordinary, noting that it is highly unusual for a sitting Fed chair and governor to be under simultaneous federal investigation while a successor is being nominated.

What This Means for Markets and Monetary Policy

The standoff introduces new uncertainty into U.S. monetary leadership at a time when investors are closely watching interest rate policy, inflation trends, and economic growth.

Warsh, a former Federal Reserve governor, is widely viewed as more aligned with Trump’s economic outlook. His potential appointment has already sparked debate among economists and market participants about how Fed policy could shift under his leadership.

With Powell’s term set to expire in May, delays in confirming a successor could leave the central bank in limbo or force Powell to remain in place longer than planned.

For now, Warsh’s nomination appears effectively frozen, pending the outcome of the Justice Department investigations. Until those probes are resolved, Senate Banking Democrats and at least one Republican are signaling they will not allow the process to move forward.

The result is a rare and high-stakes impasse, placing the future leadership of the Federal Reserve squarely in the middle of political and legal crosscurrents.

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