WASHINGTON — The Senate Banking Committee is set to hold a nomination hearing on April 16 for Kevin Warsh, President Donald Trump's nominee to chair the Federal Reserve, according to a person familiar with the matter who spoke to CNBC. The move advances Warsh's bid even as a separate criminal investigation into the Fed hangs over the process, creating a potential showdown between the White House's push for new leadership and ongoing scrutiny of the central bank's current chief, Jerome Powell.
Warsh, a former Fed governor who served from 2006 to 2011, has been a longtime favorite of Trump for his more dovish views on monetary policy. The president has openly criticized Powell for keeping interest rates too high amid economic pressures, including rising energy costs tied to the ongoing war in Iran. Trump has repeatedly called for rate cuts, arguing they would boost growth, but Powell and the Fed have maintained their independence, citing risks of reigniting inflation if rates drop too quickly.
The nomination's progress comes amid a criminal probe launched by the Trump administration into allegations that Powell misled Congress about costly renovations to the Federal Reserve's headquarters in Washington. The investigation, led by the U.S. Attorney's Office for the District of Columbia under Jeanine Pirro, stems from claims that the Fed concealed the true extent of expenses, which reportedly exceeded $1 billion for upgrades to the Marriner S. Eccles Building and other facilities. Powell has dismissed the probe as a politically motivated effort to coerce the Fed into lowering rates, a charge the administration denies.
Sen. Thom Tillis, a Republican from North Carolina and a member of the Senate Banking Committee, has vowed not to support Warsh's confirmation until the investigation concludes. "I won't vote to confirm Warsh until the probe is resolved," Tillis said in recent statements, emphasizing his concerns over threats to the Fed's independence. Tillis has otherwise praised Warsh's qualifications, noting his experience during the 2008 financial crisis, but he insists that any confirmation must prioritize the central bank's autonomy from political interference.
Despite Tillis's stance, the White House is pressing forward, scheduling the hearing despite the committee's public calendar not yet reflecting the date. Politico first reported the April 16 timing last week, and while Warsh and a Senate Banking Committee spokesman declined to comment, sources indicate Trump's team views the nomination as a priority to reshape the Fed in line with his economic agenda.
The probe's future remains uncertain following a recent court ruling. On Friday, U.S. District Judge James Boasberg in Washington denied the government's motion to reconsider his earlier decision to quash subpoenas seeking access to Fed records. In his opinion, Boasberg wrote, "The Government's fundamental problem is that it has presented no evidence whatsoever of fraud." The ruling effectively stalls the investigation, as the subpoenas were key to gathering evidence on the renovation allegations.
The U.S. Attorney's Office responded swiftly, with a spokesman for Jeanine Pirro stating Saturday, "We will absolutely absolutely appeal the judiciary's interference with our access to the grand jury." This appeal could prolong the legal battle, potentially overlapping with Warsh's confirmation process and complicating Trump's dual goals of installing new leadership while pursuing the probe.
Powell, who has led the Fed since 2018, has defended the renovations as necessary for modernizing aging infrastructure and ensuring operational security. The projects, which began under previous administrations, involved seismic retrofitting, technology upgrades, and aesthetic improvements to the Fed's iconic headquarters along Constitution Avenue. Critics, including some congressional Republicans, have questioned the costs, alleging mismanagement, but the Fed maintains full transparency in its financial disclosures to Congress.
Democratic critics of the nomination have been vocal. Sen. Elizabeth Warren of Massachusetts sent a sharply worded letter to Warsh in March, warning that his confirmation would make him a "rubber stamp for President Trump's Wall Street First Agenda." Warren accused Warsh of having "learned nothing from your failures" during his earlier tenure at the Fed, particularly his role in post-crisis policies that she argues favored big banks over everyday Americans. Warsh has not publicly responded to the letter, consistent with norms for federal nominees avoiding statements before hearings.
The broader context underscores tensions over the Fed's role in a volatile economy. Congress established the central bank in 1913 to insulate monetary policy from short-term political pressures, a principle that economists say has helped keep inflation in check historically. With the Iran conflict driving up oil prices—Brent crude has surged above $90 per barrel in recent weeks—analysts warn that premature rate cuts could exacerbate price pressures, echoing the stagflation of the 1970s.
Adding another layer of uncertainty, Trump shook up the Justice Department on Thursday by firing Attorney General Pam Bondi and naming Todd Blanche as acting attorney general. Blanche, a former defense lawyer who represented Trump in his New York hush-money trial, joined the administration last year. The change could influence the Powell probe, as the acting AG oversees the U.S. Attorney's Office. The administration insists any investigation decisions rest with the DOJ, but Trump has been unequivocal in his support, stating on March 19, "There is criminality" related to the Fed's building expenses.
Tillis's office did not respond to requests for comment over the weekend, but his position could force a delicate balancing act in the Republican-controlled Senate. With a slim majority, Trump can ill afford defections on key nominations, yet pushing Warsh forward risks alienating moderates concerned about politicizing the Fed. Committee Chair Mike Crapo, R-Idaho, has not publicly weighed in, but sources suggest he is coordinating with Tillis to avoid a public rift.
Warsh's potential chairmanship would mark a significant shift. During his prior stint, he advocated for aggressive responses to the housing bubble and later dissented against prolonged low rates post-crisis, positions that align with Trump's current push for looser policy. Supporters argue his experience would bring fresh perspective to challenges like supply chain disruptions and geopolitical risks, while detractors fear it could undermine the Fed's credibility.
As the hearing approaches, the parallel tracks of nomination and investigation highlight the high stakes for U.S. economic policy. A successful confirmation could accelerate Trump's vision for the Fed, but legal hurdles and senatorial opposition may delay or derail it. For now, all eyes are on the Senate Banking Committee, where the April 16 date looms as a potential flashpoint in the ongoing battle over central bank independence.
The implications extend beyond Washington. Investors are watching closely, with Fed futures markets pricing in a modest chance of rate cuts by mid-year, though Powell's recent testimony to Congress reiterated a data-dependent approach. Any perception of political meddling could rattle markets, as seen in past episodes when Trump tweeted criticisms of the Fed, leading to temporary stock dips. Economists from institutions like the Brookings Institution have cautioned that eroding independence could lead to higher long-term borrowing costs and volatile inflation expectations.