By Howard Schneider
WASHINGTON, March 13 (Reuters) – President Donald Trump’s nomination of Kevin Warsh to become Federal Reserve chair remains stalled for now in a continued clash between a key Republican senator and a Trump-appointed prosecutor, even as current Chair Jerome Powell’s term heads into its final weeks.
Jeanine Pirro, the U.S. Attorney for the District of Columbia, said on Friday she will continue her criminal probe of Powell involving Fed building renovations after a judge quashed grand jury subpoenas and called the investigation a pretext to pressure the central bank for lower interest rates, as Trump has done.
Trump has engaged in unprecedented efforts to sway central bank policymakers and overhaul the Fed’s governing body.
While Pirro cast her decision to appeal U.S. District Judge James Boasberg’s ruling as a defense of the grand jury system, the practical effect is also to keep Warsh’s nomination on hold.
Republican U.S. Senator Thom Tillis said he will not vote to advance any of Trump’s Fed nominees until the probe of Powell is closed. Tillis, a member of the Senate committee that would vet Warsh’s nomination, has clashed with Trump since deciding not to run for reelection to the Senate.
“This ruling confirms just how weak and frivolous the criminal investigation of Chairman Powell is and it is nothing more than a failed attack on Fed independence,” Tillis wrote on X after the judge’s ruling. “We all know how this is going to end and the D.C. U.S. Attorney’s Office should save itself further embarrassment. Appealing the ruling will only delay the confirmation of Kevin Warsh as the next Fed Chair.”
The judge blocked the subpoenas after finding “no evidence whatsoever” of wrongdoing by Powell.
The Fed was designed by Congress to insulate its officials from political influence in setting interest rates, an approach followed to a greater or lesser degree by all top central banks globally.
Pirro, in a voluble press conference, said she has no plans to back off, and brushed aside questions about her decision potentially keeping Warsh from joining the Fed and potentially allowing Powell to continue chairing rate setting meetings beyond the end of his four-year term leading the central bank.
“I don’t care what they say, I have a job. I have the ability to go into a grand jury. There are questions that the American public and people in D.C. are entitled to know,” Pirro said. “This decision will be appealed by the United States Department of Justice.”
Powell has called the probe a pretext to pressure the Fed on interest rates.
Her decision now ties Warsh’s fate to the speed and outcome of the appeals process.
Powell’s term as chair ends on May 15, with two more meetings of the central bank between now and then. His term as a Fed governor continues, however, and if Warsh has not been confirmed by the Senate in time for the Fed’s June 16-17 Powell would continue leading the meetings of the rate-setting Federal Open Market Committee.
It would be an ironic twist, with the actions of one member of the Trump administration upending the president’s long-sought goal of replacing Powell, but one that becomes increasingly possible as time passes.
“Judge Boasberg makes clear what everyone knew all along: This was a blatant abuse of power,” said Kathryn Judge, a Columbia University law school professor who has followed issues around the Fed’s legal structure and protections. “Pirro at this point seems to be far more of an impediment than an aid to the president’s efforts to install his preferred team at the Fed. Any effort to appeal seems likely to fail and will only delay Senate hearings for Warsh.”
(Reporting by Howard Schneider; Editing by Will Dunham)
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