A bitter spat is set to dominate Kevin Warsh’s confirmation hearing Tuesday morning.
It’s not the economic outlook or bank regulation. The real focus for Senate Banking members vetting Warsh to be the next Federal Reserve chair will be President Donald Trump, his yearslong campaign to oust Jerome Powell and whether his DOJ will drop a Fed probe that threatens to derail Warsh’s confirmation indefinitely.
“The president’s current nominee will be ultimately confirmed,” Sen. John Kennedy said Monday. “In what decade that happens, I’m not sure.”
Sen. Thom Tillis, who is single-handedly holding up Warsh until the DOJ matter is tossed, appears to have no further questions for him. Tillis has said Warsh is a good pick.
“I’m not going to spend much time talking to Kevin,” the retiring North Carolina Republican said Monday. “I’m going to start talking about what a bogus investigation Powell is subject to.”
Warsh plans to be somewhat explicit about where he’d try to insulate himself from Trump’s wishes and where he wouldn’t.
According to prepared testimony, Warsh will say that the Fed should be “strictly independent” when it comes to interest rates. But that deference would not apply in other areas, including bank regulation and the “stewardship of public monies.”
He’ll indirectly downplay Trump’s influence and argue that the Fed’s autonomy is not “particularly threatened” when elected officials weigh in on rates. He’ll also reassure markets that he’s still committed to keeping inflation under control.
Democrats, who are planning to focus on Warsh’s large and somewhat opaque financial holdings, will likely be unmoved. So in the end, it will probably come down to how soon Trump is willing to drop his campaign against Powell and unlock Tillis’ vote.
“We’re still trying to work through it,” Tillis said Monday.
What else we’re watching:
— DHS funding: Senate Budget Chair Lindsey Graham is expected to release the text of a budget resolution that would direct the Judiciary and Homeland Security Committees to draft long-term funding legislation for immigration enforcement.
— Expulsion looms for SCM: The House could expel Rep. Sheila Cherfilus-McCormick as early as Wednesday, after House Ethics meets Tuesday afternoon to decide her punishment for a range of violations.
Victoria Guida, Sam Sutton, Jasper Goodman, Jordain Carney, Meredith Lee Hill and Hailey Fuchs contributed to this report.
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