WASHINGTON – President Donald Trump's nominee to run the Federal Reserve, Kevin Warsh, is likely to face tough questions about his vast financial holdings at a hearing next week by the Senate Banking Committee.
Massachusetts Sen. Elizabeth Warren, the top Democrat on the panel, told reporters she had met with Warsh Thursday and urged him to disclose more information about his assets than was included in financial disclosure forms released earlier this week. Warsh, a former top official at the Fed and a wealthy investor, listed financial assets worth well more than $100 million. The figures are given in ranges so a precise value wasn't disclosed.
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Warsh has large stakes in several investment funds and owns a solo financial advisory firm, Vicarage LLC. He has pledged in ethics filings to sell those holdings and stop working as an adviser if he is confirmed as Fed chair. Yet he has not disclosed the values of all his investments through the funds, or the names of some of his clients.
“This is a real problem,” Warren said. “No one has gone forward in the Trump administration without disclosing fully their financial holdings."
It's the latest hurdle for Warsh, 56, who is already facing an unusually turbulent path toward the Fed chair position, which he has sought for at least a decade. Sen. Thom Tillis, a North Carolina Republican and member of the Banking panel, said this week he won’t vote for Warsh until a Department of Justice investigation into current Fed chair Jerome Powell is resolved. The stand-off threatens to delay Warsh’s confirmation until after Powell’s term as chair ends May 15.
But even if Warsh is confirmed, he will likely face ongoing pressure from Trump to cut the Fed's key interest rate despite the Iran war pushing inflation higher and many other policymakers expressing skepticism about cuts. And he could end up serving while Powell remains on the Fed's governing board, an uncomfortable arrangement that hasn’t occurred since the late 1940s.
Warsh was a member of the Fed's governing board from 2006 to 2011, and is married to Jane Lauder, the daughter of billionaire cosmetics heir Ronald Lauder, a major Republican donor. He has also worked in finance and has made roughly $10 million as an advisor to billionaire investor Stanley Druckenmiller's family office, according to his disclosure form.
Warren said Warsh declined in their meeting to disclose more information about his holdings, “which, frankly, raises more concerns.” She added that his extensive investments are “a red flag surrounded by fireworks and sparklers.”
Warsh said in his disclosures that “pre-existing confidentiality” agreements prevent him from specifying the size of individual holdings or in some cases what they are. For example, he owns a stake in Polymarket, the prediction betting market, but did not say how large it is. He said he would comply with all ethics requirements by selling those investments if confirmed.
Also Thursday, all 11 Democrats on the Banking Committee called for next week's hearing to be postponed until the DOJ drops the investigation into cost overruns for a $2.5 billion Fed building renovation project and Powell's role in it, as well as an effort by Trump to fire Fed governor Lisa Cook.
Both moves “appear to be part of the Trump Administration’s broader effort to take control of the Fed,” the letter said.
Powell said last month that he would continue to serve as Fed chair if no replacement is confirmed by the end of his term. He added that previous chairs have done the same. Yet on Wednesday, Trump threatened to try to fire Powell if he did so.
Powell has also said he would remain on the Fed's governing board even after his term as chair ends if the investigation isn't dropped. By doing so, he could prevent the Trump administration from filling another seat on the board, a step he might take if he saw it as a way to preserve the Fed's political independence.
Powell serves a separate term as governor that lasts until January 2028. A Fed chair hasn’t remained on the board as a governor even after a new chair is appointed since 1948.
The battles over Powell, as well as the uptick in inflation from the Iran war, could create extensive headaches for Warsh.
“The ground has shifted materially beneath Warsh’s feet since he was nominated,” Marco Casiraghi, an analyst at Evercore ISI, an investment bank, wrote earlier this week. “Both with the oil shock and the failure to swiftly resolve the DOJ investigation, which we think means Powell will now likely stay on as a regular governor for several months.”
Trump is likely to keep pushing for Fed rate cuts regardless of who is chair. The Fed’s short-term rate influences other borrowing costs in the economy, including for mortgages, auto loans, and business borrowing.
Treasury Secretary Scott Bessent earlier this week appeared to reduce the pressure on the Fed somewhat, when he told reporters Tuesday that rates should be cut, “but if they want to wait for some clarity, I understand that.” Many Fed officials have said they want to see if the jump in energy prices starts to push up inflation more broadly. If it doesn't, the Fed could potentially look past the gas price spike and cut rates, particularly if the economy weakens.
Yet when Trump was asked Wednesday on Fox Business whether he still expects interest rates to decline, he said, “when Kevin gets in, I do. ... interest rates should be much lower.”
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Associated Press Writer Fatima Hussein contributed to this report.