By Bo Erickson, Andrea Shalal and Richard Cowan
WASHINGTON, Jan 30 (Reuters) – President Donald Trump’s pick of Kevin Warsh to lead the Federal Reserve is running into opposition from within his own party in Congress, as at least one Republican senator said on Friday he will block the confirmation if the Justice Department’s investigation of U.S. central bank chief Jerome Powell continues.
Senator Thom Tillis, a North Carolina Republican, said in a post on X that he will continue to “oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman” until the Justice Department’s inquiry into Powell is “fully and transparently resolved.”
Trump later fired back, saying Tillis’ “obstructionist” stances against some of the president’s policies explain “why he’s no longer a senator.” Tillis has said he will not run for re-election in 2026, but will remain in the Senate until early next year.
“If he doesn’t approve, we just have to wait until somebody comes in and we’ll approve it, right?” Trump said at the White House.
Tillis, however, did not appear to be backing down.
“This proves how the separation of powers works: one senator can prevent the most powerful man on the planet from potentially undermining the credibility and the independence of the Fed,” the North Carolina senator told reporters. “I don’t consider that obstruction. I consider that doing my job.”
Tillis sits on the Senate Banking Committee, which is in charge of Fed confirmations. The committee has a narrow 13-11 Republican majority, so losing just one vote could hold up the process of getting the nomination before the full Senate, where Republicans have just a three-vote majority.
The basis of the Justice Department’s inquiry into Powell stems from remarks last year to the committee about cost overruns at a building renovation project at the Fed’s headquarters complex in Washington.
The Justice Department served Powell with a grand jury subpoena earlier this month, the Fed chief said. Powell has denied any wrongdoing and described the probe as a “pretext” to pressure the central bank on monetary policy. Trump has demanded that the Fed deliver big interest rate cuts to help stimulate the economy.
Trump on Friday encouraged the Powell probe. “He’s either incompetent, or he – or somebody – is a crook, and we’ll find out,” the president said.
But Tillis called the probe “a bogus potential investigation.” At least one other Republican, Senator Lisa Murkowski of Alaska, has previously said she would not back a Trump nominee to the Fed while that probe is underway.
SOME REPUBLICANS CRITICAL OF TRUMP’S PRESSURE ON FED
Tillis’ threat to block Warsh’s nomination is the latest in a string of barbs between himself and the president.
Trump, in an ABC News interview on Wednesday, called Tillis and Murkowski “losers” after their criticism of his administration’s immigration enforcement operation in Minnesota.
The North Carolina senator has been more outspoken since he announced his impending retirement from the Senate last year. His decision followed a high-profile break with Trump over the administration’s tax-and-spending bill, citing concern about the impact on Tillis’ home state, a competitive electoral battleground with both Republican and Democratic statewide leaders.
Tillis’ current opposition does not mean the Warsh nomination will not ultimately be successful, as the senator complimented the former Fed governor in his post on Friday and left room for eventual support if the Justice Department changes course.
Republican senators in Trump’s second term have given wide latitude to the president’s nominees. But Tillis and a small group of Republican senators critical of Trump’s attempts to influence the Fed have stressed the importance of maintaining the central bank’s independence in the face of the Trump administration’s criticism and investigations into Powell and Fed Governor Lisa Cook.
Trump attempted to fire Cook from the central bank, and the U.S. Supreme Court last week heard arguments on the legality of that move.
It is unclear when Warsh’s confirmation hearing will be held, but Senator Tim Scott, a South Carolina Republican who chairs the banking committee, welcomed the pick and said he intends to hold “a thoughtful, timely confirmation process” for the nominee.
White House economic adviser Kevin Hassett, who Trump also considered for the Fed chief nomination, acknowledged on CNBC on Friday that the legal issues surrounding the Fed could gum up any Senate approval process until they are resolved.
“That it is an issue that should get resolved quickly,” Hassett said.
Other Republicans on the Senate Banking Committee, such as Senator Bernie Moreno of Ohio, called Trump’s pick “phenomenal” and said Warsh “will restore independence to the Federal Reserve.”
Democrats on the committee are expected to oppose Trump’s pick.
“This nomination is the latest step in Trump’s attempt to seize control of the Fed,” Senator Elizabeth Warren, the committee’s senior Democrat, said in a statement.
“Donald Trump said anybody who disagrees with him will never be Fed Chairman. Former Fed Governor Kevin Warsh – who cared more about helping Wall Street after the 2008 crash than millions of unemployed Americans – has apparently passed the loyalty test,” Warren said.
(Reporting by Bo Erickson, Andrea Shalal, and Richard Cowan; Additional reporting by Jarrett Renshaw, Chris Prentice, Susan Heavey, and Michael S. Derby; Editing by Aidan Lewis, Sergio Non and Paul Simao)
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