00:00Kevin Warsh, President Trump's choice to succeed Jerome Powell as the head of the Federal Reserve
00:04is on Capitol Hill today to begin his confirmation hearing before the Senate Banking Committee.
00:09He's expected to face some pointed questions about his commitment to keeping the Fed independent and
00:14not simply doing what President Trump wants. The Federal Reserve has always operated as its own
00:19entity, in theory at least, and President Trump made his displeasure with that practice very well
00:24known when it came to Powell, who was a Trump appointee, for his refusal to buck that trend.
00:30Specifically, Powell would not lower interest rates as the president wanted and repeatedly
00:36suggested would be best for the economy. And Warsh will surely be asked about his plan for interest
00:41rates. President Trump wants them slashed, and Warsh seems to support that plan. According to his
00:47prepared remarks released Monday, Warsh is expected to say, quote, I do not believe the operational
00:53independence of monetary policy is particularly threatened when elected officials, presidents,
00:59senators, or members of the House state their views on interest rates. Central bankers must be strong
01:04enough to listen to a diversity of views from all corners. Those remarks don't exactly roll off the
01:09tongue, but he's basically saying he has no problem with Trump or anyone else emphatically demanding what
01:14they want in regards to the country's piggy bank. What's interesting, though, is that cutting rates in this
01:20economy would be a pivot for Warsh. He's a longtime inflation hawk, and typically lowering rates
01:25increases inflation and vice versa. Now, as for whether or not he'll ultimately be confirmed,
01:30we'll keep an eye on outgoing Republican Senator Tom Tillis from North Carolina. He's vowed to block
01:35Warsh's nomination until the DOJ drops their investigation into Jerome Powell regarding his
01:41congressional testimony about the multi-billion dollar renovation to the Federal Reserve Building.
01:45That would likely deadlock the committee vote at 12 to 12. There's a workaround, but it might require
01:51Democratic votes, and we all know how well Congress plays together. So all of this to say,
01:57his confirmation is not a slam dunk.
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