President Donald Trump needs an off-ramp if he wants to get rid of Jay Powell as the chair of the Federal Reserve.
Now, his administration and top players on Capitol Hill are actively discussing what that will look like.
The Senate is expected to take its first steps toward advancing the nomination of Kevin Warsh to be the next Fed chair on April 16.
But the big obstacle remains the same. Sen. Thom Tillis (R-N.C.) refuses to vote for Warsh while the Justice Department continues its criminal inquiry into the Powell-led renovations of the Fed’s headquarters. Tillis sits on the Senate Banking Committee, so a “no” vote from the North Carolina Republican would deadlock the panel and sink Warsh’s nomination.
Officials at many levels of the Trump administration are aware of discussions happening now over a way out of the impasse. Key officials have accepted it will have to involve ditching the criminal investigation into Powell for Warsh to make it through the Senate.
Tillis has no reason to back down, and there are other GOP senators beyond the Banking Committee who share his concerns on the Powell probe. That means the only way out for Trump is a compromise.
What an offramp could look like. To satisfy Trump, the administration will need to find another way to pursue a probe of Powell and renovations to the Fed’s headquarters under his watch.
Some options include a congressional investigation or an internal review led by another government agency. Powell formally requested a review of the renovation effort by the Fed’s Office of Inspector General in 2025.
It’s possible these options could be enough to placate Tillis and other GOP senators. But Tillis hasn’t weighed in publicly on whether he’d accept them.
It’s a harder sell for Trump, who has egged on the investigation into Powell and attacked him repeatedly for months on end. Trump will have to decide if getting his hand-picked Fed chair is enough of a win to make it worthwhile.
The timeline. There’s pressure to figure out a solution quickly. Powell’s term as Fed chair is up on May 15.
The Banking Committee is still waiting for Warsh’s final paperwork and financial disclosures to be submitted. Next week’s hearing date is contingent on that paperwork being filed. Warsh’s disclosures are expected to be complicated, given his family wealth.
The Banking panel’s rules require notice to be given by the end of the day today for a hearing next Thursday. If Warsh’s paperwork remains elusive, we expect the hearing timing to be pushed back.
If not for the Powell investigation, it appears Warsh would have no problem getting confirmed. The former Fed Board member has won praise from GOP senators including Tillis. Sen. Mark Warner (D-Va.) also had good things to say after meeting with Warsh.
