Author: Michael S. Derby
Feb 5 (Reuters) – U.S. Treasury Secretary Scott Bessent declined on Thursday to commit that the Trump administration would not prosecute Federal Reserve chairman nominee Kevin Warsh if he follows monetary policies the president opposes.
Sen. Elizabeth Warren asked Bessent at a Senate hearing if he would commit “that if Warsh doesn’t cut rates exactly the way Donald Trump wants, he won’t be prosecuted and he won’t be investigated by the Justice Department.”
“That’s up to the president,” Bessant responded in a vitriolic exchange with the Massachusetts Democrat.
Bessant was responding to a question about Trump’s comments over the weekend in which Trump appeared to joke that he would sue Warsh if he did not cut interest rates if he was confirmed to succeed Fed Chairman Jerome Powell later this year. When asked about the comment, Trump later told reporters it was a joke.
While the president tried to dismiss the comment as humor, he has continued to pressure Powell’s Fed to lower interest rates.
The effort ultimately led to an unprecedented criminal investigation into the Fed, which Powell said last month was effectively a pretext to attack the central bank for not taking direct orders from Trump to set monetary policy.
By law, the Fed is responsible for making monetary policy decisions independently because it is widely believed that the central bank’s mission of low and stable inflation and maximum sustainable job growth is better achieved by policies free from political interference.
The Federal Reserve cut interest rates three times in 2025, lowering its benchmark policy rate by three-quarters of a percentage point to a range of 3.50%-3.75% in an effort to boost the weak job market while hoping that inflation will continue to slow.
Inflation remains above the Fed’s 2% target, in part because of the steep tariffs Trump has imposed on imported products.
WARSH confirms possible roadblocks
Trump last week named Warsh, a former Fed governor, as Powell’s successor, whose term as central banker ends in May. Trump has made it clear that whoever he nominates needs to act on his belief that interest rates must come down.
Trump told NBC that “there’s no question” Warsh agrees with him that borrowing costs need to be lowered and that he believes the Fed chairman nominee wants to take that policy stance for his own reasons.
Warsh’s dovish approach to monetary policy comes as he runs for the Fed chairmanship, following a hawkish tenure as a Fed governor during the main phase of the global financial crisis from 2006 to 2011. This shift has led some observers to question Wash’s true position.
Ongoing investigations into cost overruns such as renovations to the Fed’s Washington headquarters may also affect the speed of Warsh’s approval by the U.S. Senate this year. Sen. Thom Tillis, a Republican member of the Senate Banking Committee, said he would block any confirmation hearings until the legal issues are resolved. Senate Democrats have made similar demands.
“I actually like Wash as a potential chairman,” Tillis noted during Thursday’s hearing with Bessant.
(Reporting by Michael S. Derby; Editing by Chizu Nomiyama and Paul Simao)
