People had been wondering which Trump desired more: Warsh’s smooth installation at the Fed or getting back at Powell. Now we have an answer.

(SeaPRwire) –   Since President Trump announced former Fed Governor Kevin Warsh as his pick to lead the central bank, a major question has loomed: Would the president halt his ongoing conflict with current chairman Jerome Powell—whom he appointed in 2017—to smooth the way for his new nominee?

It appears the answer is no.

In a Fox News interview released yesterday, the president indicated he would not abandon a criminal investigation into Powell regarding renovations at the Federal Reserve building. This follows Powell’s January announcement that the Department of Justice had issued subpoenas to the central bank concerning his testimony on office construction overlooking the National Mall.

“Don’t you think we have to find out what happened there?” the president remarked to Fox, adding that he felt compelled to investigate. He also noted that while he has wanted to dismiss Powell, he has refrained from doing so to avoid excessive controversy.

By continuing his pursuit of Powell, Trump has created a significant hurdle for Warsh’s confirmation.

Warsh is widely considered an ideal candidate by Republicans; he is a firm supporter of the Federal Reserve’s independence—a stance favored by both D.C. officials and Wall Street—and brings experience from his time serving under Ben Bernanke. Furthermore, he has expressed a more bullish view of the American economy than the current chairman.

The path for Warsh’s return to the Fed includes a Senate Banking Committee hearing scheduled for April 21. Republicans hold a narrow 13-11 lead on the committee, and Senator Thom Tillis has signaled he will obstruct Warsh’s nomination unless the investigation into Powell is dropped.

Tillis clarified that his stance is not personal, stating: “My position has not changed: I will oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman, until the DOJ’s inquiry into Chairman Powell is fully and transparently resolved.”

While Republican insiders suggest that Warsh’s credentials are not the issue, Democratic sources argue that he will struggle to prove he is not merely a tool for the White House.

If Tillis blocks the nomination, the committee would be deadlocked, meaning a single Republican defection could end Warsh’s chances. Trump seems to be gambling that Tillis will eventually concede, telling Fox: “He’s on his way out … and I think he doesn’t want the legacy of stopping a great person who could be great … I know he said what he said, and maybe it’s true, in which case I’ll have to live with it.”

Challenges ahead for Warsh

The president’s actions have not helped bolster the image of Fed independence. Lawmakers and markets are already wary of political interference in the central bank, especially given Trump’s repeated threats to fire Powell and his public criticisms of Powell’s character and strategy. At the same time, Trump has made it clear he expects a more dovish leader and has frequently praised Warsh.

Should Warsh eventually take over the chairmanship, he will face the difficult task of proving his independence to colleagues who prioritize the institution’s credibility and want to ensure he is not acting on behalf of the White House.

Warsh has proposed several reforms for the central bank, including a positive outlook on how AI might boost productivity and justify interest rate cuts. Although these views are well-documented, he may find it difficult to gain internal support if his motives are viewed with skepticism.

However, Trump’s fixation on the Fed’s physical infrastructure might actually benefit Warsh if he is confirmed. The president’s background in real estate development seems to have influenced his focus on the Fed’s building projects; if this distracts him from monetary policy, it could provide Warsh with the independence he needs.

Despite their policy differences, Powell and Warsh share the belief that the Federal Reserve should remain insulated from political and legal battles. Powell’s parting advice to his successor was to avoid getting entangled in elected politics.

Warsh seems to agree, as he has consistently argued for the Fed to focus strictly on its primary economic mandate. An economist looking to reform the Fed’s interaction with the bond market is unlikely to want the institution bogged down in the legal system.