Trump Seeks to Change Investigation Path for Powell, Clearing Way for Warsh's Fed Nomination

On April 24, Trump recently expressed an open attitude towards an ‘alternative approach’ to the investigation of Federal Reserve Chairman Powell. This statement is seen as a potential ‘step’ to resolve the current deadlock in the nomination of the Fed chairman and to clear the way for Kevin Warsh to take over the Fed. When asked if an investigation could be conducted by an entity other than the Department of Justice, Trump stated, ‘Yes, it can be done, and it’s actually quite easy.’ Analysts believe this may indicate Trump’s willingness to transfer the investigative function from the Department of Justice to Congress or other independent agencies. Currently, Warsh, Trump’s nominee for Fed chairman, is in an awkward state of ‘stagnation.’ Despite Warsh performing solidly at the Senate Banking Committee hearing and striving to demonstrate his independence, he faces opposition from North Carolina Senator Thom Tillis, who has explicitly stated he will block Warsh’s nomination due to the Department of Justice’s criminal investigation into the renovation costs of the Fed’s headquarters and Powell’s related testimony. Tillis, as a key vote on the committee, has taken a very firm stance: he will not support Warsh’s nomination as long as the DOJ investigation into Powell continues. If this ‘investigation diversion’ plan is implemented, it could provide Tillis with a reason to withdraw his opposition, thereby breaking the current deadlock. At the hearing on Tuesday, Warsh attempted to establish himself as a defender of the Fed without angering Trump. When asked how he would respond if Trump requested to lower interest rates to 1%, Warsh declined to take a position, stating only that ‘the independence of the Fed should be determined by its leadership.’ Even when faced with the politically provocative question of ‘Did Trump lose the 2020 election?’, he cleverly avoided the issue by asserting that ‘the Fed does not interfere in politics.’ Current Chairman Powell remains resolute, clearly stating that he will continue to serve as a Fed governor after his term ends as long as the judicial investigation is not concluded. If Warsh cannot secure confirmation by mid-May, he will continue to serve as acting chairman by law.