Fed chair nominee pressed on potential conflicts of interest, independence

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The nominee to lead the US Federal Reserve, Kevin Warsh, on Tuesday faced criticism and backlash from Democrats questioning his financial disclosures and potential conflicts of interest. Heading into today’s Senate Banking Committee confirmation hearings, it was clear that the independence of the Fed remains a key issue for many lawmakers concerned about the President Donald Trump’s influence over any Senate-confirmed candidate. With Jerome Powell’s term as the US Federal Reserve Chair set to expire next month, lawmakers are scrambling replace the long-serving official. Under questioning from Massachusetts Senator Elizabeth Warren, the committee’s ranking member who repeatedly referred to Warsh as a “sock puppet” for the president’s policies, the prospective Fed chair sidestepped answering whether Trump lost the 2020 US election and identifying any issue on which the two disagree. Warren said confirming Warsh could result in the Fed “granting special accounts to [the Trump family’s] crypto company or bailouts to his friends on Wall Street if they get into trouble” and create “more opportunities for Trump’s corruption.” Warsh faced similar questions from Rhode Island Senator Jack Reed and other Democrats on his position on lowering interest rates — an action Trump has repeatedly called for and signaled his pick would push if confirmed. “The president never once asked me to commit to any particular interest rate decision, period, and nor would I ever agree to do so if he had, but he never did,” said Warsh in response to a question from Republican Senator John Kennedy. Related: US senator urges delay of CLARITY Act Senate markup until May: Report The nominee faced at least one direct question on crypto from Wyoming Senator Cynthia Lummis, responding that digital assets were "part of the fabric of our financial services industry in the United States.” Warsh has pledged to divest from his financial holdings, which include investments in crypto and AI companies, before taking the oath of office if confirmed. The potential conflicts of interest, coupled with Trump’s repeated attempts to oust Powell before his term expires, have many questioning whether any Fed chair picked by the president could remain independent. “While we want the Fed to be independent, we also recognize that there has to be collaboration between the administration, Congress and the Fed,” said Committee Chair Tim Scott. “The independence is in making sure they do their job as it relates to the dual mandate.” Prediction market users don’t anticipate a new Fed chair anytime soon Powell’s term as chairman is set to end on May 15, giving lawmakers a matter of weeks to confirm Warsh or another Fed chair. He may be allowed to serve in a temporary capacity until his successor’s Senate confirmation, and will remain a member of the Fed’s Board of Governors until 2028. The likelihood of a delay in Warsh’s confirmation is fueling an active event contract on prediction markets platform Polymarket, where many users are betting that the Senate may not act to confirm him until June. Some 37% of the positions gave took a chance he would be confirmed by May 15, while 78% are betting it won’t happen before June 30.

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