Fed Chair nominee Kevin Warsh denied that President Trump demanded he lower interest rates in a heated Senate hearing Tuesday.
Asked whether Trump pressured him to commit to interest-rate cuts, the 56-year-old financier said: “He didn’t ask for it, he didn’t demand it, he didn’t require it and nor would I have ever done so.”
Warsh — who was joined at the hearing by his billionaire Estee Lauder heiress wife Jane Lauder, along with NFL star Larry Fitzgerald — has argued that artificial intelligence will create a productivity boom while keeping prices low, allowing the Fed to slash rates.
He also refused to defend Fed Chair Jerome Powell or Fed Governor Lisa Cook against the government’s probes, saying it was “inappropriate” to comment on cases pending before courts.
“My disagreements with Chairman Powell are about policy, not personality,” said Warsh, who is currently a fellow at Stanford University’s Hoover Institution.
Warsh – who has been a harsh critic of his would-be colleagues, comparing Fed officials to “pampered princes” – seemingly jabbed at the Fed’s attention to climate change and racial inequity under the Biden administration, saying the central bank needs to “stick to its lane.”
He criticized the Fed for changing its inflation framework in 2020, which he blamed for the “inflation surge…we’re still living with,” and for being outspoken on the direction of interest rates when “we need central bankers who are humble, who are nimble, who can react.”
Sen. Elizabeth Warren (D-Mass.) called Warsh a “sock puppet,” accusing him of flip-flopping on his inflation hawk stance to “snag his dream job” under Trump.
Though Republicans on the committee, like Chairman Tim Scott, lauded Warsh’s credentials, including his stint as a Fed governor from 2006 to 2011, he is facing an uphill climb in the road to confirmation.
Sen. Thom Tillis (R-NC) doubled down on his vow to block Warsh’s approval until the DOJ ends its probe into Powell, defending the Fed’s over-budget headquarters renovation.
“Let’s get rid of this investigation so I can support your confirmation,” Tillis said. “Mr. Warsh, the only thing I’ve found odd about you is you’ve never watched an episode of Seinfeld.”
He attributed most of the overrun from the DC headquarters renovation project to the increase of input costs, calling it “unfortunate but legitimate” – adding that it would take a penal colony “the size of Texas” to house every government official who went over-budget on a project.
The committee has not yet set a date for a vote, though an opposing tally from Tillis could leave them deadlocked at 12-12 – potentially delaying Warsh’s confirmation until May 11, since the Senate is out the week of May 4.
Warren, the top Democrat on the Senate Banking Committee, also questioned whether Warsh’s financial disclosures concealed links to companies associated with the Trump family, Jeffrey Epstein or Chinese companies. His filings revealed he is slated to become the wealthiest Fed chairman in history.
She also argued that he mishandled the 2008 financial crisis during his previous Fed term, prioritizing “multi-billion dollar bailouts” for Wall Street CEOs with “nothing for American families.”
Warsh’s current economic theory is that AI makes workers more productive, so companies can produce the same amount of work with fewer staffers – reducing inflation in the long run.
Economists have warned that heavy spending related to AI on data center construction and energy needs could actually reheat inflation in the short term.
As Warsh faces hurdles to confirmation, Powell has promised to stay on as “chairman pro tem” if his successor is not confirmed by May 15 – though Trump has threatened to fire him for doing so.
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