Sen. Thom Tillis wins Federal Reserve battle with DOJ, now backs Warsh nomination

Sen. Thom Tillis didn’t blink and now a Department of Justice investigation has ended and President Donald Trump’s nominee for Federal Reserve is about to be confirmed.

On Wednesday morning, Tillis, a Republican from Huntersville, voted to confirm Kevin Warsh, an attorney and financier, to serve as chairman of the central bank.

“He is an outstanding nominee, and it is time for the Federal Reserve to move beyond this distraction and return its full attention to its mission,” Tillis said Wednesday in committee.

For months, Tillis told his colleagues and Trump that the only way he would vote yes on Warsh was if the Department of Justice dropped its investigation into the current chairman, Jerome Powell.

Last Friday, the DOJ folded and told Tillis the investigation was over.

“It’s no secret that the reason that Mr. Warsh, his nomination, could have been held up is because of my concern with the investigation,” Tillis said Wednesday. “I want to thank the Department of Justice for the assurances that they gave me.”

On Wednesday, the Senate Committee on Banking, Housing and Urban Affairs confirmed Warsh’s nomination 13-11, along party lines with Republicans in favor of Warsh.

Tillis never disagreed with Trump that Warsh had the pedigree to lead the Federal Reserve, but he did have concerns that DOJ was being weaponized against Powell, who Trump sees as a political enemy.

Powell took the reins of the Federal Reserve in 2018 but has been at odds with the president since his first-term, when Powell raised the country’s interest rate.

When Trump began his second-term in office, he tried to fire Powell but was told he didn’t have the authority.

Powell’s term expires on May 15.

But a prosecutor didn’t wait for Powell’s term to expire. Instead, an investigation was launched into Powell over whether he lied under oath to Congress about the costs to revitalize the historic buildings that house the Federal Reserve offices.

Powell didn’t foresee a $700 million increase in costs because the Eccles building was built over a landfill with water-table issues.

Tillis quipped last week that if they put everyone in prison from the federal government who went over budget, they would need to build a penal colony the size of Texas.

“The fact of the matter is, this was based on two minutes of testimony,” Tillis said. “It was not criminal. Seven witnesses on this committee agreed with it.”

Tillis acknowledged Wednesday that the Federal Reserve Inspector General Michael Horowitz is investigating the matter.

“I’ve got confidence that this investigation is over, that Horowitz, who I believe is one of the best inspector generals in the whole of government, is going to study this,” Tillis said. “He has referral power. If he believes that there was criminal activity, then he would refer it.”

But not everyone was convinced that Warsh was the man for the job.

Sen. Elizabeth Warren, a Democrat from Massachusetts, kicked off the hearing voicing her concerns that inflation is up, job creation is down and Trump wants someone in the Federal Reserve that he can manipulate.

“A vote today by this committee to advance Mr. Warsh will bring the president one step closer to completing his illegal attempt to seize control of the fed and to artificially juice the economy,” Warren said. “Trump has not been subtle about his takeover. He’s threatened to fire the fed chair. He’s actually tried to fire a fed governor, and he started not one, but two bogus criminal investigations to push them out.”

Warren pointed to the investigation only being dropped against Powell because Warsh’ nomination couldn’t move forward and that this immediately triggered the inspector general’s investigation. She told her colleagues not to be fooled that the investigation is over and pointed to a quote from Tillis saying as much.

“Mr. Warsh is a Trump sock puppet who is so cowed by the President that he could not even say that Donald Trump lost the 2020 election,” Warren said. “Members of this committee who vote for Mr. Warsh and help facilitate President Trump’s takeover of the central bank, will come to regret it. Unfortunately, it will be American families that will pay the price.”

Tillis said he disagreed with Warren’s assessment.

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