Warsh is one step away from taking over the reins of the Fed. Trump's candidate with the support of the committee

Kevin Warsh, US President Donald Trump's nominee to head the Fed, received the support of the Senate Banking Committee on Wednesday by a vote of 13 to 11, which puts him on track for confirmation by the full Senate before the end of Jerome Powell's term on May 15, Bloomberg reported.

Warsh's nomination was held up by Republican Sen. Thom Tillis until the Justice Department agreed last week to drop an investigation into budget overruns during the renovation of the Fed's Washington headquarters.

Tillis, who called the investigation “spurious” and a threat to the Fed's independence over monetary policy, said in an interview on NBC's “Meet the Press” that he had received assurances that the department would not reopen the investigation until the Fed's inspector general, which is also reviewing the project, issued a notice of criminal prosecution.

However, the Democrats on the committee were not convinced. Senator Elizabeth Warren warned that Trump still intends to control the Fed. Democrats also demanded an end to legal proceedings against Fed member Lisa Cook.

“There's a smell of stagflation in the air,” Warren said.

She added that confirming Warsh's nomination would help Trump dominate the Fed's monetary policy.

“Trump has not been subtle about this takeover,” she added.

Warsh promised to reduce the Fed's $6.7 trillion balance sheet, establish a new framework for managing inflation and change the way the central bank communicates with the public. However, he did not provide many details on how he might pursue each of these goals.

Warsh will almost certainly face intense pressure from Trump on monetary policy. In an April 21 interview with CNBC, the president said he would be disappointed if Warsh didn't cut interest rates immediately after taking office. Against this backdrop, Warsh promised to protect the Fed's independence.

During last week's hearing, Warsh blamed the Fed for allowing inflation to rise in the wake of the COVID-19 pandemic. While he said high prices remain a problem for Americans, he also floated the idea of ​​a new framework for dealing with persistent inflation, without providing details. He also avoided declaring a short-term interest rate path and suggested that Fed officials habitually give financial markets too much guidance on policy direction.

“Taken together, this points to a more centralized, less transparent and potentially more policy-driven framework for monetary policymaking,” said EY-Parthenon chief economist Gregory Daco.

Warsh and his wife, Jane Lauder, reported assets of at least $192 million in financial statements filed as part of his nomination. However, his total net worth is likely much greater, making him one of the richest Fed officials in the central bank's history.

Bloomberg estimated his wife's net worth at $2.5 billion.

Democratic lawmakers have called for tighter scrutiny of Warsh's assets, and Warsh has promised to quickly withdraw investments from some funds whose underlying assets he did not disclose, citing confidentiality agreements. (PAP Business)

kek/ asa/ aop/