Trump’s quest for more sway over Fed faces fresh hurdles

Published Thu, Apr 16, 2026 · 01:22 PM

AFTER years of criticising the Federal Reserve’s leadership and trying to browbeat policymakers to slash interest rates, President Donald Trump is running out of time to install his pick to lead the central bank when Jerome Powell’s term as chair officially ends on May 15.

On Tuesday, Kevin Warsh will make his case to the Senate Banking Committee, which oversees the Fed and wields significant power over his ability to clinch a confirmation. That leaves the administration with only 24 days to get Warsh through an initial committee vote before the full Senate takes up his candidacy — a task that became all the more difficult this week.

Warsh’s nomination has been warmly received by Republican lawmakers. Yet standing in the way of a smooth transition is a criminal investigation by the Justice Department into Powell’s handling of renovations at the Fed’s headquarters in Washington.

The investigation threatens to leave Warsh in an extended limbo once the May deadline lapses given that a key Republican on the Banking Committee, Sen. Thom Tillis of North Carolina, is refusing to advance the nomination until the legal threats against Powell end.

It also increases the odds that Powell — who has vowed to protect the Fed’s independence from the White House — stays on as a governor, a position he can hold until 2028.

Doing so would hand Trump a double loss. It would prevent the president from appointing someone to take Powell’s seat on the board of governors while complicating Warsh’s job once he eventually takes over as chair.

“They’re about to snatch defeat from the jaws of victory by pursuing this unsupported political investigation,” said Scott Alvarez, who previously served as the Fed’s general counsel.

Trump on Wednesday conveyed no intention of dropping the investigation, saying it was about more than a criminal inquiry into the renovations and was also a “probe on incompetence,” in reference to Powell. The president added that he would fire Powell if he did not resign from the Fed after his term as chair ended.

In January, the Justice Department issued subpoenas to the central bank, prompting Powell to deliver a video message denouncing the move and calling out the president for seeking to use legal threats as a cudgel to compel the Fed to lower borrowing costs.

Judge James Boasberg of US District Court quashed the subpoenas last month, writing in his ruling that “there is abundant evidence that the subpoenas’ dominant (if not sole) purpose is to harass and pressure Powell either to yield to the president or to resign and make way for a Fed chair who will.”

Boasberg later denied the department’s request for him to reconsider his judgment.

Jeanine Pirro, the US attorney for the District of Columbia and a longtime ally of Trump’s, has yet to officially appeal the ruling. But, like Trump, she has staunchly defended the investigation. In the latest provocation, prosecutors from her office paid a surprise visit to the Fed’s active constructive site on Tuesday, drawing a rebuke from the Fed’s counsel.

If the Senate does not confirm Powell’s successor by May 15, the Fed chair told reporters last month, he will continue on as “chair pro tempore.”

“That is what the law calls for,” he said in an implicit signal that he would challenge any attempt by Trump to try to claim the authority to name a temporary chair.

Powell also noted that this arrangement was what the Fed had done in the past, including in 2022 when he held that position before lawmakers confirmed him for a second term.

One worry is that the president will disregard this precedent and try to elevate Stephen Miran, whom he tapped last year to fill an expiring term. Gary Richardson, who served as the Fed’s historian and is now a professor of economics at the University of California, Irvine, suggested that the courts would side with Powell if Trump went down this path.

The Federal Reserve Act stipulates that “upon the expiration of their terms of office, members of the board shall continue to serve until their successors are appointed and have qualified.”

That has long been interpreted to apply to the chair. The board also has so-called delegation authority, meaning that in the event of a vacancy for the chair position, the board has the latitude to delegate its responsibilities to a single member to serve in a temporary capacity.

A recent spate of legal cases concluded that, when an agency position requires Senate confirmation, the president cannot appoint an acting person without the upper chamber’s buy-in.

The historical record also supports Powell’s view, Richardson said. He pointed to Arthur F. Burns, whose term as chair ended on Jan 31, 1978. After President Jimmy Carter declined to reappoint him, Burns stayed on for an additional five weeks until the Senate confirmed his successor, G. William Miller.

Burns departed the Fed altogether about a month after Miller took over as chair, noting that he “deserves the fullest opportunity to establish his leadership at the helm of our nation’s central bank.” It was reported around that time that he would have stayed on only if he considered his successor “dangerous” to the economy. NYTIMES