The journey to get Kevin Warsh confirmed to chair the Federal Reserve has become a long and strange trip. Just about everyone piled into the car at this point — from Senate Majority Leader John Thune to Sen. Thom Tillis (R-N.C.) — would like to find an exit.
The problem is the driver: President Donald Trump. And Trump has repeatedly shown no interest in pulling off the highway.
Warsh’s hearing on Tuesday went as well as expected. Republicans loved him, and Democrats bludgeoned him. Warsh is a sure bet to sail through the Senate, likely on a party-line vote.
But the basic political obstacle remains the same. Tillis has now said dozens of times he won’t vote to advance Warsh through the Senate Banking Committee until the Justice Department drops its criminal inquiry into current Fed Chair Jay Powell. That’s a bottleneck that will keep Warsh from the floor.
“It’s their call,” Tillis told reporters after Tuesday’s hearing.
Swapsies? There’s been a lot of chatter about a trade that could placate both Tillis and Trump: having the Banking panel expand its longer-running probe into the Fed’s renovation costs.
CNBC Squawk Box’s Joe Kernen practically begged Trump to accept that as a potential off-ramp during an interview Tuesday. Trump declined. “I can’t imagine that ‘Too Late’ is taking money on construction. I can’t, but it’s possible,” Trump said of Powell. “But we have to find out.”
The challenge for Republicans and the Trump administration is that the Powell criminal matter most likely needs to be resolved before other options move forward — including a congressional probe or new internal investigation within the federal government.
Sources around the Banking panel say it’s unlikely the committee would expand its probe as long as a separate, criminal inquiry by DOJ is ongoing.
The Trump administration’s goal is to have Warsh in place when Powell’s term ends May 15, which means there’s pressure for a committee vote soon. The Senate is on recess the week of May 4.
Conversations are currently ongoing across the Trump administration and Congress about the path forward.
Banking Republicans remain upbeat. Mostly. “The president really would like to get a new man in and, really, there’s nothing standing in the way of this with the exception of an investigation,” Sen. Mike Rounds (R-S.D.) said. “With a little cooperation, I think we can get that done.”
