Fed Nominee Kevin Warsh Defends Independence Amid Senate Scrutiny Over Trump Influence Claims

Kevin Warsh, President Donald Trump’s nominee to lead the Federal Reserve, pushed back against accusations that he would act as a “sock puppet” for the administration during a contentious Senate confirmation hearing on Tuesday.

“Monetary policy makers must act in the nation’s interest,” Warsh told the Senate Banking Committee. “I’m committed to ensuring that the conduct of monetary policy remains strictly independent.”

Trump has repeatedly pressured the Federal Reserve to cut interest rates, even publicly criticizing outgoing Chair Jerome Powell. The pressure escalated in recent months, with the Department of Justice opening a criminal investigation into Powell over alleged false statements regarding cost overruns at the Fed’s Washington, D.C. headquarters.

Powell has dismissed the probe as politically motivated, suggesting it was an attempt to intimidate him into supporting lower rates. Trump has denied directing prosecutors to pursue the investigation.

Senator Elizabeth Warren, the top Democrat on the Banking Committee, accused Trump of seeking to undermine Fed independence. “He does not want an independent Fed,” she said, “and in fact he has said, and I quote, ‘anybody that disagrees with me will never be Fed chairman.’”

Warren also cited Trump’s recent remarks that interest rates would drop “when Kevin gets in.”

The political fallout has even divided Republicans. Senator Thom Tillis of North Carolina announced he would not support Warsh’s nomination until the Powell investigation is dropped. “You have extraordinary credentials. They’re impeccable,” Tillis told Warsh on Tuesday. “Let’s get rid of this investigation so I can support your confirmation.”

Senators Question Warsh on Fed Independence and Rate Policy

Lawmakers from both parties pressed Warsh on whether Trump’s pressure had influenced his views on interest rates. Warsh denied any undue influence:

“The President never asked me to predetermine, commit, fix, decide on any interest rate decision in any of our discussions, nor would I ever agree to do so.”

Warsh also reiterated his support for shifting the Fed’s focus from quantitative easing to interest rate policy. Since the Great Recession, the Fed has purchased trillions in U.S. Treasury bills to stimulate the economy—a strategy critics argue has fueled inflation.

Warsh has advocated for reducing the Fed’s balance sheet but emphasized a cautious approach:

“That kind of regime change would have to be deliberate, well orchestrated, well choreographed, and well described, so that unnecessary upsets are not done to financial markets.”

Warsh’s Crypto Investments Raise Concerns

Warsh’s financial disclosures reveal a portfolio exceeding $130 million, including investments in over two dozen crypto ventures. His holdings include:

• DeFi lender Compound
• Derivatives trading platforms dYdX and Lighter
• Blockchain networks Solana, Avalanche, Cosmos, and Polkadot

The nominee’s crypto ties have drawn scrutiny, with some senators questioning potential conflicts of interest in his approach to monetary policy.