Former Federal Reserve Gov. Kevin Warsh’s bid to succeed Jerome Powell as chair of the central bank moved to the full Senate on Wednesday, after the Senate Banking Committee approved his nomination, 13-11, by a party-line vote.

The green light came despite vehement opposition from the committee’s ranking member, Sen. Elizabeth Warren, D-MA, who called Warsh a “uniquely unfit candidate” with a “catastrophic” previous tenure as Fed governor from 2006 to 2011.

In opening remarks Wednesday, Warren noted Warsh’s role in crafting rescue packages for Wall Street firms during the 2007-08 crisis.

“Despite bailing out Wall Street and selling out American families, he has said repeatedly he has ‘no regrets,’” Warren said.

She also cited Warsh’s wealth, asserting that, if confirmed, he would “enter the office with more than $100 million in secret financial assets.”

But much of her argument tied back to pressure President Donald Trump has applied to Powell – through repeated threats to fire him, as well as a Justice Department investigation into whether the Fed chair lied to Congress about over-budget renovations at two central bank buildings.

The DOJ signaled Friday that it would drop the Powell probe, leaving the Fed inspector general to investigate.

The status of the probe served as a linchpin in Wednesday’s vote – as Republican Sen. Thom Tillis of North Carolina had threatened to torpedo Warsh’s nomination unless the DOJ backed off of Powell.

Tillis was among the 13 senators approving Warsh’s bid Wednesday. He signaled his vote Sunday in a post on X, noting that he “take[s] the Department of Justice at its word” about the end of the probe and calling Warsh an “outstanding nominee.”

“It is time for the Federal Reserve to move beyond this distraction and return its full attention to its mission,” Tillis wrote.

In a statement Wednesday, Senate Banking Committee Chair Tim Scott, R-SC, called Warsh’s potential leadership at the Fed “essential.”

“Frankly, his time as a former Governor of the Federal Reserve during the financial crisis makes him battle-tested and ready to serve – and not only serve, but to lead,” Scott said.

Social sparring

Warren and Tillis, meanwhile, have sparred over social media since Friday.

Warren on Saturday posted footage from CNN of Trump telling a reporter the Powell probe is “not dropped,” and added the caption: “Any Republican Senator who believes Donald Trump’s scheme to take over the Fed is over is fooling themselves.”

Tillis, in an X post Monday, accused Warren of “launching baseless attacks to undermine the independence of a highly qualified Fed Chair nominee.”

Warren repeated her concern Wednesday that the Trump administration could resume the Powell probe at any point.

Powell’s term as Fed chair ends May 15. He is set later Wednesday to announce the Federal Open Market Committee’s latest decision on interest rates. At that press conference, he’ll doubtless field questions as to whether he’ll stay on as a Fed governor through 2028 if the Senate confirms Warsh as chair. If Powell does, that presumably means Gov. Stephen Miran, whose term is expired, would leave the board.  

‘Inadequate responses’

Warsh’s bid passed through the Senate Banking Committee on Wednesday despite demands from eight Democrats that the nominee answer several questions left unclear in last week’s nomination hearing.

“Given President Trump’s repeated and continued attacks on the independence of the Fed, your ability to meaningfully answer direct questions from Congress is more important than ever, making your inadequate responses even more concerning,” the senators, including Warren, wrote in a letter Tuesday to Warsh.

Particularly, the Democrats wrote, Warsh refused last week “to answer whether he had signed a loyalty pledge to President Trump or whether the President had sought assurances of his loyalty in the context of vetting him” as a potential Fed chair.

Additionally, the Democrats wrote, Warsh did not answer whether he supported the investigation into Powell and refused to say whether he thought the probe served as a threat to the independence of monetary policy.

Sen. Ruben Gallego, D-AZ, cited concerns about Fed independence as reasoning for his voting against Warsh on Wednesday, in a statement seen by Banking Dive.

“Instead of promising to uphold standards of independence, transparency and communication, Kevin Warsh has avoided our questions and given contradictory answers at every turn,” Gallego said. “The Fed must be able to make decisions in the best interest of our economy, not of politicians.”

Powell – and a judge in a court case stemming from the DOJ investigation – have asserted the probe was driven not by the over-budget renovations or the prospect of perjury but by the Trump administration’s desire to pressure Powell to resign and make way for a Fed chair who would lower interest rates as quickly as the president would like.