Warsh calls for Fed independence, reform

By Andrew Rice
The Center Square

Kevin Warsh, President Donald Trump’s pick to lead the Federal Reserve, said he would maintain the central bank’s independence from the president and enact reforms to its procedures.

“I’m committed to ensuring that the conduct of monetary policy remains strictly independent, equally committed to work with the administration and Congress on non-monetary matters that are part of the Fed’s remit,” Warsh said.

Warsh was nominated to take over leadership at the Federal Reserve when current chair Jerome Powell’s term ends in May. Trump and Powell have publicly feuded over the past year regarding lower interest rates.

Warsh appeared to address Trump’s and Powell’s feud during his opening statement before the Senate Banking Committee’s confirmation hearing on Tuesday.

“I do not believe that independence of monetary policy is threatened when elected officials state their views on rates,” Warsh said.

The U.S. Department of Justice launched a probe into Powell and Trump has criticized him over planned renovations to the Federal Reserve’s building in Washington, D.C.

The U.S. Supreme Court is expected to decide a separate case involving Trump’s planned firing of Federal Reserve Governor Lisa Cook. Trump accused Cook of committing mortgage fraud before she joined the Federal Reserve.

Warsh has served as a governor on the Federal Reserve since 2006. Sen. Tim Scott, R-S.C., highlighted Warsh’s experience navigating the 2008 financial crisis as an indicator of his ability to navigate current affordability concerns.

“Confirming Kevin Warsh will make sure that affordability is at the center of our economic agenda,” Scott said.

Sen. Elizabeth Warren, D-Mass., questioned Warsh’s ability to remain independent from President Donald Trump in terms of monetary policy. She said Warsh would be a “sock puppet” for Trump”s economic decisions if confirmed.

“The Senate should not be aiding and abetting Donald Trump’s illegal takeover of the Fed by installing his chosen sock puppet as chair,” Warren said. “It’s an invitation for corruption and for economic catastrophe.”

Warren also slammed Warsh’s credentials and accused him of baling out banks instead of families during the 2008 financial crisis.

Warsh asserted it was the job of Congress to regulate financial policy and ensure affordability, not the Federal Reserve. He repeated calls for the Fed to maintain its place in regulating inflation.

“If confirmed as chairman, I will be faithful to the Constitution, to the Federal Reserve Act, and to the very best of the Fed’s traditions,” Warsh said. “I believe a reform-oriented Fed can make a real difference to the American people.”