In Washington, Treasury Secretary Scott Bessent stated that the choice to initiate legal proceedings against Kevin Warsh, President Donald Trump’s nominee for Federal Reserve chair, would ultimately rest with the president himself. This statement came amid questions surrounding Trump's prior comments about potentially suing Warsh if he did not lower interest rates.
At a private event hosted by the exclusive Alfalfa Club, President Trump joked that he might sue Warsh should the nominee fail to reduce rates. When asked by reporters later that evening, Trump characterized his statements as satire, emphasizing that the event was a comedy roast.
Despite these clarifications, Sen. Elizabeth Warren of Massachusetts, the senior Democratic member of the Senate Banking Committee, confronted Bessent during a committee hearing on Wednesday. Warren’s questioning highlighted the unusual and unprecedented criticism, as well as a legal investigation launched by the Trump administration against the incumbent Federal Reserve chair, Jerome Powell.
Trump originally nominated Powell in 2017 but soured on him after Powell raised interest rates the following year. Since returning to the White House, Trump has consistently expressed dissatisfaction with Powell’s policies. This antagonism intensified last month when Powell disclosed that the Department of Justice had subpoenaed the Federal Reserve as part of an inquiry into Powell’s Senate testimony concerning a $2.5 billion building renovation.
The investigation has caused unease among some Republican senators regarding the Trump administration's apparent inclination to infringe on the Federal Reserve's traditionally political independence. Sen. Thom Tillis of North Carolina, who plans to retire at the end of this year, announced that he would withhold his approval for Warsh's nomination until the investigation into Powell is concluded. Without Tillis’ vote, Warsh could face delays in the committee's confirmation process.
During the committee session, Warren queried Bessent about assurances that Warsh would not be subject to lawsuits or Department of Justice scrutiny if he refrained from cutting interest rates. Bessent responded that such decisions would be left to the president. A spirited exchange followed, with Bessent reiterating that Trump’s earlier comments were intended jokingly.
Warren expressed surprise at Bessent’s response, remarking, "That was supposed to be the softball!" When questioned later about the possibility of Trump suing Warsh, Tillis conveyed his discomfort, stating that even entertaining the idea was concerning.
Further underscoring the controversy, Tillis presented a list of committee members who had expressed no belief that Powell committed any criminal act. During the hearing, he noted his own presence at what he termed the "alleged scene of the crime," concluding that no wrongdoing was observed.
Sen. Tim Scott of South Carolina, chairing the Senate Banking Committee, also distanced himself from the administration’s rhetoric. In an interview with Fox Business, Scott declared that incompetence does not amount to a criminal offense.
This hearing marked Bessent’s second consecutive day of congressional testimony regarding the Financial Stability Oversight Council's annual report. His prior session with the House Financial Services Committee became contentious, with exchanges of insults occurring over topics spanning fiscal policy, the Trump family's business affairs, and other issues.