Sen. Tillis Drops Blockade of Trump’s Fed Chair Nominee Kevin Warsh [0:00-3:54]

The federal judge said that the DOJ produced essentially zero evidence of any crime by Jerome Powell and a mountain of evidence that the entire investigation was just a tool to pressure him to resign or cut interest rates. We've done the judge blocking it, the DOJ ignoring him, a Republican senator finally forcing him to back down. And now Trump's handpicked replacement could be confirmed within weeks. We need to walk through this because it was a totally avoidable mess and I think it also shows you where we are right now. And so the sole situation centered around Jerome Powell, the federal reserve chair, the same Jerome Powell who Trump himself appointed during his first term. And Powell's term as Fed Chair, it expires May 15th, though notably he can stay on as a governor of the Fed board. But for months, Trump has been throwing a tantrum because Powell's refused to lower interest rates to the levels that Trump wants. And so Trump's repeatedly demanded that Powell resign before his terms up and even threatened to fire him if he doesn't. The two important things here. First, Powell is literally just doing his job. Congress designed the federal reserve specifically to be insulated from political pressure because the alternative is presidents just juicing the economy for short term political wins at the cost of long-term stability. Literally every time in history someone's tried that, it ended in inflation, recession or bold. And second, it's not even clear that Trump actually has the power to fire Powell. But our law only allows the president to remove a Fed chair for serious offenses, not policy disputes. And so then, when the threats didn't work, Trump's DOJ launched a criminal investigation into Powell. And the pretext was a $2.5 billion renovation of the Fed's headquarters that's gone over budget, plus testimony that Powell gave to Congress about the project last year. I don't know if you remember it, but basically nobody bought it. Most people that had eyes on this, they said this was obviously a pressure campaign to either force Powell to resign or get him to bend on interest rates. The federal judge agreed, right? The judge ruled that the DOJ had produced essentially zero evidence that Powell committed any crime and a mountain of evidence that the agency was using its subpoenas to pressure Powell to resign or to cut rates. The judge concluded that it was an abuse of power and blocking the DOJ from serving subpoenas to the Fed. And that should have ended it. But it did, Trump just kept pushing and pushing, like he does, and it might have actually worked, except for one Republican senator who decided that it was just enough was enough. Senator Majority Leader Tom Tillis took a very rare public stand against. Trump, he flat out refused to allow the confirmation of Trump's nominee to replace Powell, Kevin Warsh, until the DOJ dropped what Tillis called the bogus pro. So that was the leverage point, right? Trump has the votes to confirm Warsh, barely, and he needs Warsh confirmed before Powell's term expires on May 15th. Without Warsh, Trump's plan just collapses. So Tillis is no vote. It was effectively a hold on the entire thing. And so what you saw is that on Friday, the DOJ finally came. Janine Piro, Trump's prosecutor for the District of Columbia, announced that she was ending the investigation. Though I will note, she added a caveat, saying, I will not hesitate to restart a criminal investigation should the facts weren't doing so. She then also asked the Fed's inspector general to review the cost overruns, which is interesting because the Fed's IG was already investigating it at Powell's direction and also a previous review back in 2021, already found no evidence of wrongdoing. So Piro essentially announced that she was closing an investigation while pointing to another investigation that already happened and found nothing and reserving the right to come back later. Because you know, all that, it makes sense. But more importantly for this story, yesterday, you had Tillis announcing that he would now allow the confirmation process for Warsh to proceed. We worked a lot over the weekend to make sure that we were very clear that we had the sureances from the DOJ that I need it to feel like they were not using the DOJ as a weapon to threaten the independence of the Fed. So this will allow Mr. Warsh to move on with his confirmation on time. Tillis also adding that he received specific assurances that the investigation would only restart if the Fed's inspector general found serious wrongdoing and made a criminal refer, which it is a meaningful guardrail assuming that the DOJ honors. And so yeah, I mean, essentially, we're gonna have to wait to see if they're being honest or whether they're waiting until Warsh is confirmed and then they just immediately reopen everything. And so as far as the next steps, you have the Senate Bank Committee scheduling a vote on Warsh for this Wednesday. But he just needs to clear a committee before his nomination can move to the full Senate floor. And the entire goal is to get him confirmed before Powell's term expires May 15th, which is about two weeks from today. But again, we then have to tie it with our previous coverage in case you forgot. Warsh appears to have a $100 million plus net worth that he will not fully disclose. There are real questions about his independence given that Trump has openly said that Warsh will deliver lower interest rates and Senator Elizabeth Warren called him Trump sock puppet on the Senate floor. And so regardless of whatever happens with Powell, I can understand this whole situation with Warsh, it is a stress test for whether the federal reserves independence, right, which is upheld under enormous political pressure for decades. Survives the next Trump term. Hey, time will tell.