Key Points:
- Senator Thom Tillis is blocking the confirmation of Trump’s Fed nominee, Kevin Warsh.
- The blockade is a protest against the DOJ’s criminal investigation into current Chair Jerome Powell.
- Trump accused Powell of theft regarding renovation costs at the Fed’s headquarters.
- The standoff threatens to delay the Fed’s leadership transition scheduled for May.
President Donald Trump faces a major standoff with his own party that could delay his plans to lower interest rates. Trump recently nominated Kevin Warsh to replace Jerome Powell as the next Federal Reserve Chair. However, Republican Senator Thom Tillis has vowed to block every Fed nominee until the administration drops a criminal investigation into Powell.
The Justice Department is currently probing Powell over cost overruns during renovations at the Fed’s headquarters. Trump has publicly called Powell a “crook,” suggesting the costs amount to theft or gross incompetence.
Senator Tillis, a crucial swing voter on the Senate Banking Committee, calls the investigation “bogus” and a direct attack on the central bank’s independence. Without Tillis’s vote, Warsh likely cannot get confirmed.
This deadlock creates a serious timeline problem. Powell’s term officially ends in mid-May. If the Senate does not confirm Warsh by then, complex legal questions arise about who will run the central bank. Trump’s economic team wants Warsh in power quickly to start cutting interest rates ahead of the November midterm elections, as polls show voters remain unhappy with the economy.
Despite the pressure from his own aides to resolve the issue, Trump is digging in. He suggested on Friday that he might even wait until Tillis retires in 2027 rather than drop the investigation.
Meanwhile, Democrats and other Republicans, such as Senator Lisa Murkowski, are backing Tillis, arguing that the White House must stop its “vendetta” against Powell before moving forward.
The standoff leaves Wall Street nervous. Investors worry that political pressure is threatening the Fed’s ability to manage the economy without interference. Unless the administration finds an off-ramp for the investigation, the transition of power at the world’s most important central bank remains in limbo.
