Trump Fed pick Kevin Wersh clears key Senate hurdle as he prepares for final vote

Senate Banking Committee A vote was taken Wednesday to advance the nomination of Kevin Wersh to lead the Federal Reserve, leaving President Donald Trump’s pick for a final confirmation vote in the Republican-controlled Senate.

The vote fell along party lines, with all 13 Republican members voting in favor of the nominee and all 11 Democrats voting against him. It was the first fully partisan vote on a Fed chair nominee in the committee’s history, Senator Elizabeth Warren, D-Mass., said in a press release.

Warren, the ranking member of the banking panel, criticized Warsh before the vote, warning that his confirmation would erode the central bank’s independence from the executive branch.

“Trump’s economy is in real trouble. Inflation has gone up, job creation has gone down. The stench of stagflation is in the air and President Trump is getting desperate,” Warren told the committee before the vote.

“The vote today by this committee to nominate Mr. Wersh will bring the President one step closer to completing his illegal effort to seize control of the Fed and artificially influence the economy,” he said.

As expected, Wersch passed the hurdle just hours before the Fed was to deliver its latest decision on interest rates – possibly the last one under Chairman Jerome Powell.

The central bank is likely to maintain its wait-and-see strategy, as sticky inflation, a seemingly stable labor market and Iran-war-related price shocks keep the prospect of further rate cuts at bay.

The Fed’s cautious approach has been the main source of friction between Trump and Powell, who has faced almost constant criticism over his refusal to cut rates as the president wishes.

Critics and Powell himself say the pressure campaign went beyond rhetoric.

The Justice Department launched a criminal investigation against Powell and the Fed, focused on alleged cost overruns associated with a billion-dollar renovation of the central bank’s Washington headquarters. Powell, in a statement disclosing the investigation in January, accused the administration of targeting him because of the Fed’s decisions on interest rates.

Investigation puts Warsh’s prospects in jeopardy: Banking Committee member Sen. Thom Tillis, R-N.C. Vowed to block Trump’s nominee unless the DOJ abandons its efforts.

Trump had openly supported the investigation led by US Attorney Jeanine Pirro, even as a federal judge thwarted her efforts by blocking the issuance of a grand jury subpoena.

Pirro vowed to appeal as recently as last Wednesday — but two days later, he suddenly announced the DOJ would close the investigation.

Tillis, in turn, said he would no longer oppose Warsh’s nomination, but assured that Trump’s selection would move forward.

Warren warned that Pirro’s announcement that the Fed’s inspector general was asked to investigate the issue of cost overruns “leaves the door open” for the investigation to be reopened.

“No one is stupid,” Warren said of Wednesday’s poll. “Trump is still going after control of the Fed, and he’s keeping the threat of bogus criminal charges alive until he gets what he wants.”

But Tillis said after the vote that Warren was “absolutely wrong on every point she’s tried to make.”

“I am confident that this investigation is closed,” he said.

The full Senate is likely to vote on Warsh’s confirmation the week of May 11, meaning he could be confirmed before Powell’s term ends on May 15.

Every prior Senate confirmation vote on a Fed chair candidate has included some bipartisan support, and Warsh’s full-Senate vote could become the most partisan vote in the current system of selecting Fed chairmen.

Warsh needs only a simple majority for confirmation. Republicans have a 53-seat majority in the chamber.

In Warsh’s case, Senator John Fetterman, D-Pa. can get bipartisan support from, who pointed out Semaphore On Tuesday, they plan to vote in favor of the president’s selection.

—emily wilkins And matt peterson Contributed to this report.