Senate Banking Democrats demand delay on Warsh nomination until Powell and Cook investigations end

• The Senate Banking Committee has 13 Republicans and 11 Democrats, meaning one Republican defection alongside all Democrats would deadlock Warsh's nomination and prevent it from reaching the Senate floor
• DOJ is investigating Powell for potential criminal wrongdoing related to cost overruns on Fed headquarters renovation, and separately probing Cook over unspecified allegations
• Democrats called the administration's criminal investigations of two sitting Fed board members 'dangerous and unprecedented' and an apparent effort to seize control of the central bank

Summary

Senate Banking Committee Democrats, led by ranking member Elizabeth Warren (D-Mass.), are demanding Chair Tim Scott delay Kevin Warsh's nomination for Federal Reserve Chair until ongoing Department of Justice investigations into current Fed Chair Jerome Powell and Governor Lisa Cook conclude.

Key Developments:

President Trump nominated Warsh last week to succeed Powell when his term ends in May. The DOJ is investigating Powell for potential criminal wrongdoing related to cost overruns on Fed headquarters renovations, while separately probing Cook over unspecified allegations that Trump has attempted to use as grounds for removal.

Political Dynamics:

The Senate Banking Committee comprises 13 Republicans and 11 Democrats. While Democrats alone cannot block the nomination, they need only one Republican defection to deadlock the committee and prevent floor advancement. Senator Thom Tillis (R-N.C.), a Banking Committee member, has already pledged to oppose any Fed nominees until Powell's investigation concludes, potentially providing the crucial blocking vote.

Market Implications:

The standoff creates significant uncertainty around Federal Reserve leadership during a critical transition period. Democrats argue the administration is attempting to "seize control of the Fed through criminal prosecutions," characterizing the investigations as "pretextual" and "dangerous and unprecedented." This political battle could delay confirmation and potentially impact Fed independence and policy continuity at a time when central bank credibility is paramount for market stability.

The impasse highlights increasing political pressure on the traditionally independent Federal Reserve, raising concerns about institutional integrity and monetary policy effectiveness.