Senators advance Warsh nomination after DOJ drops Fed chair probe

US Senators voted on party lines Wednesday to advance the nomination of Kevin Warsh, President Donald Trump’s pick to lead the Federal Reserve.

The vote in the Senate Banking Committee puts Warsh on a glide path to confirmation. The entire Senate is expected to vote on Warsh’s nomination in the coming weeks.

Warsh was nominated by the president in January, but his confirmation stalled due to opposition from Senator Thom Tillis, a Republican from North Carolina.

Tillis, the swing vote on the Banking Committee, refused to support Warsh so long as federal prosecutors were investigating outgoing Fed Chair Jerome Powell. Powell, Tillis, and many Democrats said the investigation was a brazen attempt by the president’s allies to cow a member of the Fed’s board of governors into voting to lower interest rates.

“You have extraordinary credentials. They're impeccable,” Tillis told Warsh at a hearing last week. “Let's get rid of this investigation so I can support your confirmation.”

US Attorney Jeanine Pirro said on Friday she would drop the investigation, and Tillis promptly said he would support Warsh’s nomination.

But Pirro said she “wouldn’t hesitate” to reopen the case, a statement that Senator Elizabeth Warren, the top Democrat on the committee, highlighted on Wednesday.

“No one is fooled,” Warren said. “Trump is still going after control of the Fed, and he is keeping the threat of bogus charges alive until he gets what he wants.”

Warsh’s independence from the Fed — or lack thereof — was a central line of attack at last week’s hearing. During one heated exchange, Warsh declined to name any issue on which he disagreed with the president.

“Mr. Warsh is a Trump sock puppet who is so cowed by the president he could not even say that Donald Trump lost the 2020 election,” Warren said on Wednesday, referring to that exchange.

Tillis said Warren was trying to “score some political points.”

“I’ve got confidence that this investigation is over,” he said. “She is flatly wrong on every point she just tried to make.”

Warren also criticised Warsh over his sprawling investment empire, his “catastrophic” tenure as a Fed governor during the Bush and Obama Administrations.

Warsh’s financial disclosures show the nominee has an investment portfolio worth more than $130 million. That portfolio features over two dozen investments in crypto ventures, including DeFi lender Compound, derivatives trading platforms dYdX and Lighter, and four blockchains: Solana, Optimism, Blast, and Zero Gravity.

Last week, Warsh stressed his independence and his desire to begin a “policy regime change much more focused on interest rates” than on quantitative easing.

Since the Great Recession, the Fed has purchased trillions of dollars of US Treasury bills, flooding the economy with cash. That policy, known as quantitative easing, stimulated the economy, but it has also fuelled inflation, according to its critics.

Warsh is a lecturer at the Stanford Graduate School of Business. He served as a member of the Federal Reserve Board of Governors from 2006 to 2011, and his nomination was viewed positively by many in the crypto industry.

Businessman and Bitcoin evangelist Michael Saylor, for example, predicted Warsh would be “the first pro-Bitcoin chairman of the Federal Reserve” if confirmed.

Polymarket punters now give Warsh a 95% chance of being confirmed by May 15, up from 27% on April 23.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.