Senate panel advances Kevin Warsh’s nomination for US Fed chair

Senate panel approves Trump’s nominee Kevin Warsh to replace Jerome Powell as US Fed chair on party line vote. His nomination heads to the full senate body for confirmation.

Kevin Warsh has passed a major hurdle to become the next chair of the United States Federal Reserve.

Warsh, US President Donald Trump’s handpicked choice to succeed current chairman Jerome Powell, whose term is set to end on May 15, was approved by the Senate Banking Committee on Wednesday.

The committee voted along party lines, with 13 Republicans voting in favour of the Republican nominee and the 11 Democratic committee members voting against his nomination.

Warsh’s nomination now advances to the full Senate for a vote to formally confirm him as the head of the central bank. The earliest the full Senate could vote to confirm Warsh would be May 11.

Warsh, who previously served on the Fed Board of Governors from 2006 to 2011, faced hurdles in advance of his confirmation hearing earlier this month. North Carolina Republican Senator Thom Tillis said he would not vote for any Trump nominee for the central bank unless a criminal investigation into Jerome Powell was dropped. Prosecutors had previously stated they found no evidence of wrongdoing.

Last week, the Department of Justice dropped its criminal investigation into Powell.

“With the Department of Justice seemingly dropping its investigation into current chair Jerome Powell, Warsh’s path to the seat looks significantly clearer,” Yerbol Orynbayev, a former governor of the World Bank, told Al Jazeera.

“The noise surrounding the independence of the central bank has somewhat quietened as a result, and, on the DOJ’s word, Senator Thom Tillis has dropped his hold on the Warsh nomination. As Republicans hold the Senate majority, there is the sense that Warsh’s confirmation is a done deal – what’s next, however, is what everyone is waiting to see.”

Democrats on the committee, including Massachusetts Senator Elizabeth Warren, voiced concerns that Warsh would be a “sock puppet” for Trump, who has long attempted to push the central bank to cut interest rates more aggressively. In a December post on Truth Social, Trump said he would only appoint someone to the central bank who agrees with him.

Now, experts are watching how Powell will proceed. Earlier this month, Trump claimed he would fire Powell if he did not step down from the central bank altogether on May 15, when his term as chair ends. Ordinarily, Powell would return to his previous seat on the Fed Board of Governors.

“Trump wants Powell off the Fed entirely as soon as his term as chair comes to an end, but his term as Fed governor runs through 2028, and there are other examples of Fed chairs staying on as governor even after they conclude their term as chair. Hard not to see how Trump’s threat of resignation won’t loom large on Powell’s decision from here,” Skanda Amarnath, a former New York Fed analyst, told Al Jazeera.

US markets are mixed in midday trading on the heels of the announcement. The Nasdaq is up by 0.1 percent with the S&P 500 only slightly above the market open at 0.04. Meanwhile, the Dow Jones Industrial Average is down 0.4 percent.