Warsh denies being Trump's 'sock puppet'
Kevin Warsh faced intense questioning from Democratic senators during his confirmation hearing to become Federal Reserve chairman. Senator Elizabeth Warren, the ranking Democrat on the banking committee overseeing the confirmation, accused Warsh of potentially serving as President Donald Trump's "sock puppet" if confirmed. Trump has indicated that Warsh would align with his agenda, including lowering interest rates to stimulate the US economy.
"Having a sock puppet in charge of the Fed would give the president access to the Fed's powerful authorities to enrich himself, his family and his Wall Street buddies," Warren stated.
When asked directly whether he would be the president's sock puppet, Warsh responded,
"Absolutely not."
The former Federal Reserve governor emphasized the importance of the central bank's independence, calling it "essential," and pledged to uphold its autonomy.
Warsh questioned over Epstein ties
Senator Warren also raised concerns about Warsh's potential connections to Jeffrey Epstein. Warsh has disclosed hundreds of millions of dollars in financial holdings, including an investment fund valued at a minimum of $100 million (£74 million), though the specific underlying assets have not been detailed.
"Do the [funds] invest in any companies affiliated with President Trump or his family, companies that have facilitated money laundering, Chinese-controlled companies or financing vehicles established by Jeffrey Epstein?" Warren asked.
Warsh declined to answer directly but indicated plans to divest his holdings if confirmed as Fed chairman. His name appears multiple times in the Justice Department's Epstein files; however, mere mention in these records does not imply any wrongdoing.
Warsh denies deal with Trump
During the hearing, Warsh denied any agreement with President Trump to reduce interest rates in exchange for the Fed chair position.
"The president never once asked me to commit to any particular interest rate decision, period, and nor would I ever agree to do so if he had, but he never did," Warsh said.
Senator Ruben Gallego, an Arizona Democrat, referenced a Wall Street Journal report from the previous year stating that Trump had pressured Warsh during a meeting to lower borrowing costs.
The hearing commenced shortly after Trump was asked in a CNBC interview if he would be disappointed if Warsh did not immediately cut rates.
"I would," said the president.
The Federal Reserve interest rate influences various financial products, including mortgages, car loans, and business borrowing.
Thom Tillis withholds support
Support and opposition to Warsh largely aligned with party affiliations; however, Senator Thom Tillis was the only Republican to withhold support. Although Tillis, who is not seeking re-election, expressed backing for Warsh's credentials, he conditioned his approval on the resolution of an inquiry into outgoing Fed chairman Jerome Powell.
Tillis praised Warsh's "extraordinary credentials" but stated he wants the investigation into Powell to be dropped before voting to confirm Warsh. The inquiry concerns cost overruns on renovations to the Federal Reserve building.
Tillis described the overruns as "unfortunate" but "legitimate." Powell intends to remain in office beyond the expiration of his term on 15 May if Warsh is not confirmed. Tillis's blockade could thus extend Powell's tenure.
Warsh wants Fed 'regime change'
Warsh arrived at the hearing with proposals to reform how the Federal Reserve measures inflation and communicates policy decisions to the public. In his opening remarks, he criticized the Fed's "forward guidance," which signals the anticipated path of interest rates.
He called this policy "unhelpful" and expressed a preference for "messier" Fed meetings without "rehearsed scripts."
Warsh also promised a "new inflation framework," indicating he might depart from the Personal Consumption Expenditures (PCE) price index currently used by the Fed. The specific nature of these changes remains unclear.
When asked by Senator Lisa Blunt Rochester, a Delaware Democrat, about previous comments advocating for regime change at the central bank and whether he would seek to remove regional Fed presidents who vote on monetary policy, Warsh clarified,
"I mean policy regime change."
