Trump Fed pick Kevin Warsh clears key Senate hurdle, teeing up final vote

The Senate Banking committee on Wednesday voted to advance Kevin Warsh's nomination to lead the Federal Reserve, teeing up President Donald Trump's pick for a final confirmation vote in the Republican-controlled Senate.

The vote fell along party lines, with all 13 Republican members voting in favor of the nominee and all 11 Democrats voting against him. It was the first fully partisan vote on a Fed chair nominee in the committee's history, Sen. Elizabeth Warren, D-Mass., said in a press release.

Warren, the banking panel's ranking member, slammed Warsh before the vote, warning that his confirmation would erode the central bank's independence from the executive branch.

"The Trump economy is in real trouble. Inflation is up, job creation is down. The stink of stagflation is in the air, and President Trump is getting desperate," Warren told the committee before it voted.

"A vote today by this committee to advance Mr. Warsh will bring the president one step closer to completing his illegal attempt to seize control of the Fed and to artificially juice the economy," she said.

Warsh cleared the hurdle, as expected, hours before the Fed was set to deliver its latest decision on interest rates — possibly for the last time under Chair Jerome Powell.

The central bank is likely to maintain its wait-and-see strategy, as sticky inflation, a seemingly stable labor market and Iran-war-related price shocks keep the prospect of further rate cuts at arm's length.

The Fed's cautious approach has been a main source of friction between Trump and Powell, who has faced a near-constant barrage of criticism over his refusal to slash rates as much or as quickly as the president wants.

Critics, and Powell himself, say the pressure campaign went beyond rhetoric.

The Department of Justice launched a criminal investigation into Powell and the Fed, purportedly focused on cost overruns associated with a multibillion-dollar renovation of the central bank's Washington headquarters. Powell, in a statement revealing the investigation in January, accused the administration of targeting him because of the Fed's decisions on interest rates.

The probe threatened Warsh's chances: Banking committee member Sen. Thom Tillis, R-N.C., vowed to block Trump's nominee unless the DOJ abandoned its efforts.

Trump had openly supported the investigation, being led by U.S. Attorney Jeanine Pirro, even after a federal judge tripped up her efforts by blocking the issuance of grand jury subpoenas.

Pirro had vowed to appeal as recently as last Wednesday — but two days later, she suddenly announced the DOJ would drop the probe.

Tillis, in turn, said he would no longer oppose Warsh's nomination, all but assuring Trump's pick would move forward.

Warren has warned that Pirro's announcement that the Fed's inspector general had been asked to investigate the cost overrun issue, "leaves the door wide open" for her to relaunch the probe.

"No one is fooled," Warren said at Wednesday's vote. "Trump is still going after control of the Fed, and he is keeping the threat of bogus criminal charges alive until he gets what he wants."

But Tillis said after the vote that Warren "is flatly wrong on every point she just tried to make."

"I've got confidence that this investigation is over," he said.

The full Senate is likely to vote on Warsh's confirmation the week of May 11, meaning he could be confirmed before Powell's term is set to expire on May 15.

Every prior Senate confirmation vote of a Fed chair nominee has included some bipartisan support, and Warsh's full-Senate vote could become the most partisan one in the current system of selecting Fed chairs.

Warsh needs just a simple majority to be confirmed. Republicans hold a 53-seat majority in the chamber.

In Warsh's case, bipartisan support may come from Sen. John Fetterman, D-Pa., who told Semafor on Tuesday that he plans to vote in favor of the president's pick.

—Emily Wilkins and Matt Peterson contributed to this report.