WASHINGTON — With Jerome Powell’s tenure as Federal Reserve chair set to expire next month, the Senate Banking Committee will consider the nominee for his replacement Tuesday when it holds a confirmation hearing for Kevin Warsh. President Donald Trump selected Warsh for the job in January, describing the former Federal Reserve official as the “perfect candidate.”
During the hearing, Warsh is expected to face tough questions about his financial holdings after he disclosed over $100 million in financial assets. Warsh has large stakes in several investment funds and owns a solo financial advisory firm, Vicarage. In ethics filings, he has pledged to sell those holdings and to stop working as an adviser if confirmed as Fed chair.
He is also likely to face questions about Trump’s insistence that the Fed cut its key interest rate despite the Iran war pushing inflation higher and other Fed policymakers expressing skepticism about the cuts.
Earlier this month, the U.S. Labor Department said consumer prices rose 3.3% in March — the largest year-over-year increase since May 2024. The increased inflation coupled with signs of weakness in the job market present a challenge for the Federal Reserve, which is tasked with the dual mandate of maximum employment and price stability.
The central bank targets a 2% long-term average inflation rate.
Trump has been pushing for lower interest rates regardless of the inflation numbers to quickly boost the economy. A longtime critic of Powell who has frequently threatened to fire him, Trump told Fox News last week that Powell is “a really bad chairman” and that he expects “interest rates should be much lower” once Warsh is confirmed.
Warsh's confirmation, however, is not guaranteed.
North Carolina Republican, and Senate Banking Committee member, Thom Tillis has vowed to vote against Warsh until the Justice Department drops its investigation into Powell over cost overruns for renovations at the Fed’s Washington headquarters. Tillis has said the investigation is “bogus, ill-timed, ill-informed.”
Powell said in January that the Justice Department had served the central bank with subpoenas and threatened a criminal indictment over his testimony about the renovations. The investigation also focuses on Powell’s brief testimony to Congress about the $2.5 billion project last June.
In 2022, the project was estimated to cost $1.9 billion. Trump contends the $600 million increase in costs is “probably corrupt.”
Powell has said he believes the investigation is “a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public rather than following the preferences of the president.”
The key interest rate impacts how much the federal government must pay to maintain the $39 trillion national debt and serves as a benchmark for borrowing costs on everything from auto loans to credit cards to mortgages.
While Powell’s term is set to end May 15, Powell said he’ll keep serving as head of the central bank until his successor is in place.
Powell has said he will remain on the Fed’s governing board even after his term as chair ends if the DOJ investigation isn’t dropped. Powell serves a separate term as governor that lasts until January 2028. A Fed chair hasn’t remained on the board as a governor after a new chair is appointed since 1948.
Last week, Tillis said seven Republican members of the banking panel do not believe Powell committed a crime during his testimony last summer. With Tillis vowing to vote against Warsh, there wouldn’t be enough support on the committee or in the Senate as a whole to confirm him.
Sen. Elizabeth Warren, D-Mass., also a member of the Banking Committee, said last week that she has urged Warsh to disclose more information about his assets than what he included on his financial disclosure forms.
“This is a real problem,” she said. “No one has gone forward in the Trump administration without disclosing fully their financial holdings.”
Warsh, 56, was a member of the Fed’s governing board from 2006 to 2011, and is married to Jane Lauder, the daughter of billionaire cosmetics heir Ronald Lauder, a major Republican donor. He has also worked in finance and has made roughly $10 million as an adviser to billionaire investor Stanley Druckenmiller’s family office, according to his disclosure form.
Warsh has said preexisting confidentiality agreements prevent him from specifying the size of some individual holdings but he will comply with all ethics requirements by selling those investments if confirmed.
The Associated Press contributed to this report.