Kevin Warsh Fed chair confirmation hearing: Live updates

Sen. Tim Scott, R-S.C., opened Tuesday’s confirmation hearing by laying out the economic challenges facing Americans. Scott emphasized how policy decisions made by the Fed can affect everything from grocery bills to homeownership.

But Scott’s speech appears to conflict with Warsh’s remarks that the Fed “must stay in its lane” delivered ahead of the hearing. Warsh reiterated a common critique that the Fed has branched beyond its primary focus of monetary policy in recent years by looking at themes like climate change or social equality.

“Fed independence is placed at greatest risk when it strays into fiscal and social policies where it has neither authority nor expertise,” Warsh said.

— Alex Harring

Warren tore into Warsh and Trump in her opening remarks.

She blamed Trump for “one economic failure after another.” She slammed him for trying to tear down the Fed’s wall of independence from the executive branch, claiming he is doing so because “he wants the Fed to use monetary policies to artificially juice the economy in the short term” before the midterm elections.

Warsh, she said, “is uniquely ill-suited for the job as Fed chair.”

She called him “an enthusiastic cheerleader for credit default swaps and complex securitizations” prior to the 2008 financial crisis.

“We should not be having this hearing today,” she said.

— Kevin Breuninger

Warsh has heavy investments in cryptocurrencies stretching across dozens of companies in his vast portfolio.

Regulatory filings show the nominee has holdings across the decentralized finance universe, though the size of the investments is unclear.

Among Warsh’s interests include stakes in Solana, Lemon Cash and Flashnet, along with an assortment of other funds with crypto exposure. Fed trading rules prohibit officials from holding large crypto positions.

—Jeff Cox

Panelists on the Banking Committee will get just one chance to question Warsh, Sen. Elizabeth Warren said.

She added that she had asked for two rounds of questioning.

— Kevin Breuninger

Banking Committee Democrats will ask Warsh about his ties to the late sex offender Jeffrey Epstein, ranking member Sen. Elizabeth Warren, D-Mass., told reporters outside the hearing room just before the hearing began.

“As you know, Mr. Warsh’s name appears in the publicly disclosed Epstein files,” Warren said.

“Obviously, there’s a lot more that the Department of Justice has not exposed, but even in those [files] there are questions that arise about his business dealings and whether there are entanglements between Mr. Warsh and Mr. Epstein on business activities,” she said.

— Kevin Breuninger

Warsh has previously said he wants “regime change” at the Fed. It’ll be interesting to see if he uses that term today, or tones down the extent of the changes he wants to make in front of senators.

It’s worth pointing out that much of what Warsh wants to do at the Fed will require approval of his new colleagues.

Lowering interest rates, reducing the balance sheet and having a Treasury-Fed accord would all need approval from the Federal Open Market Committee. For bank deregulation, Warsh will need the OK from the Fed’s Board of Governors.

— Steve Liesman and Alex Harring

Sen. Dave McCormick, R-Pa., will introduce Warsh at the hearing.

McCormick, a Banking Committee member, told CNBC’s “Squawk Box” Tuesday before the hearing that he expected the hearing to “go well.” Warsh has experience both within and outside of the Fed, in addition to an understanding of investing and financial markets, McCormick said.

“President Trump made a great choice,” McCormick said. “I think that’s going to be clear to the members of the committee this morning.”

McCormick was CEO of Bridgewater Associates, a hedge fund giant.

— Emily Wilkins, Alex Harring

A Warsh-led Fed would likely mean lower interest rates, a lighter regulatory touch and a smaller balance sheet.

Publicly, Warsh has largely held to the belief that the Fed has room to ease monetary policy, though he has not restated that position since the Iran war began nearly two months ago. He has been a long-time advocate of the central bank having a smaller imprint in the bond market, though he has been less vocal around the vagaries of bank regulation.

Trump, who nominated Warsh to the position, told CNBC’s “Squawk Box” on Tuesday that he would be disappointed if Warsh doesn’t lower rates.

—Jeff Cox

Warsh, 56, is an Ivy League-educated lawyer who’s worked in finance, politics and monetary policy.

The Albany, N.Y., native is a graduate of Stanford University and Harvard Law School. Warsh worked at Morgan Stanley before joining the Bush White House.

Warsh served as a member of the Fed’s Board of Governors from 2006 to 2011. He managed venture capital investments within the technology industry for investor Stanley Druckenmiller, a role that helped make him worth at least $135 million.

— Alex Harring

The Banking Committee is not voting on Warsh’s nomination at Tuesday’s hearing, and it hasn’t yet said when the vote will take place.

That scheduling decision could depend on what happens next in the Department of Justice’s ongoing criminal investigation of Powell, the man Warsh would succeed. Trump said Tuesday in an interview with CNBC’s “Squawk Box” that he’s not asking DOJ to end the probe.

Federal District Court Judge James Boasberg last month blocked the DOJ from issuing subpoenas related to the Powell probe, stymying the effort being led by U.S. Attorney Jeanine Pirro, a staunch Trump ally.

Then, on April 3, Boasberg denied Pirro’s motion for him to reconsider the ruling, starting a 30-day countdown clock for the government to file a notice of appeal, according to the DOJ manual.

That essentially means Pirro has until May 3 to decide whether to continue her probe.

Why this matters: If the Banking Committee tries to advance Warsh while the Powell probe remains active, Sen. Thom Tillis, R-N.C., has vowed to block his nomination.

The Banking Committee could therefore be in a holding pattern until early May, or at least until the DOJ’s next steps become clear.

What’s more, the Senate is out the week of May 4, which could mean that the soonest vote on Warsh will take place the week of May 11.

— Kevin Breuninger and Emily Wilkins

The main obstacle blocking Trump’s Fed nominee from sailing through the Senate is a member of the president’s own party.

Sen. Thom Tillis, R-N.C., has vowed to block Warsh from advancing out of the Banking Committee unless the Department of Justice resolves its criminal investigation into Powell. Trump in an interview with CNBC’s “Squawk Box” on Tuesday before the hearing said he doesn’t plan to drop it.

If Tillis sides with all Democrats on the panel in voting down Warsh’s nomination, the committee will deadlock.

Powell says that while the DOJ probe ostensibly centers on costs related to the ongoing renovations of two Fed buildings in Washington, it is really intended to target him for his refusal to cut interest rates as much or as quickly as Trump has demanded.

Tillis has said he likes Warsh, insisting that his blockade is about keeping the Fed free from executive-branch influence.

“I love the candidate,” Tillis told reporters on Capitol Hill last week. “I won’t spend my five minutes asking him about his credentials, because he has them. I’ll spend five minutes talking about a bogus investigation that’s going to cause me to vote no, unless they end the investigation.”

Trump has repeatedly criticized Tillis, who has spoken more freely since announcing he plans to retire from the Senate after his term ends in January.

— Kevin Breuninger and Emily Wilkins

Warsh was spotted getting off an elevator and entering a Banking Committee office across from the hearing room.

He did not speak or answer questions before entering the office.

— Kevin Breuninger and Emily Wilkins

Trump, on CNBC’s “Squawk Box” before the hearing, declined to say he’d approve an “off ramp” that would allow the Justice Department to give up the Powell criminal probe and clear the way for Warsh’s confirmation.

Trump was asked if it would be possible for the Senate Banking Committee to take over the DOJ’s investigation.

Trump replied that “we have to find out” about cost overruns associated with the Fed’s ongoing renovations of its headquarters.

“I’m afraid Kevin will have to have an office next to me in the White House, because that building’s not going to be done,” Trump said of Warsh.

Trump added that he “can’t imagine” Powell is “taking money on construction.”

“But it’s possible,” he added.

— Kevin Breuninger

Trump said ahead of the confirmation hearing that he will be disappointed if Warsh doesn’t cut interest rates “right away” after being confirmed as the next Fed chair.

“I would,” Trump said when asked the question directly on CNBC’s “Squawk Box.”

— Kevin Breuninger

Senate Banking Chairman Scott preemptively criticized Democrats on his committee before the Warsh hearing, telling CNBC’s “Squawk Box” that they will be overly focused on the nominee’s wealth and politics instead of on Fed policy.

“What we won’t see from the Democrats today is a conversation about the American dream, and why it’s so important for us to talk about the balance sheet of the Fed, not the balance sheet of Kevin Warsh,” Scott said.

“They’ll spend too much time talking about his balance sheet and not enough time talking about the Fed’s balance sheet,” he said. “They’ll spend too much time talking about politics and not enough time talking about an interest rate environment that is conducive for home ownership, starting a small business and making sure that the average person in this country has more money in the economy and less money parked on the sidelines.”

— Kevin Breuninger

Scott, the Senate Banking chair, told CNBC’s “Squawk Box” ahead of the hearing that Warsh will bring back an independent Fed, arguing that the central bank’s separation from executive-branch politics eroded during the Biden administration.

“Warsh is a guy who’s battle tested. He’s ready for the job, and frankly, we are more likely to see more Americans experiencing their version of the American dream” with him in charge, Scott said.

“It’s time for the Fed to get back to independence,” the South Carolina Republican said. “Under Jay Powell and the Biden administration, we saw a lot of climate conversation and decisions that prioritize the climate. We want to prioritize every single kitchen table in America” by having a Fed chair that keeps everyday Americans “direct in mind.”

— Kevin Breuninger

The Senate Banking Committee’s hearing starts at 10 a.m. ET and is expected to last roughly two hours, though it could go shorter or longer.

Chairman Tim Scott, R-S.C., is expected to kick off the proceedings with remarks centered on how the Fed’s decisions impact everyday Americans’ finances.

He’s also expected to emphasize the importance of maintaining the central bank’s independence, allowing it to concentrate on its dual mission of creating price stability and full employment in the U.S.

Scott will be followed by remarks from ranking member Elizabeth Warren, D-Mass., who has recently raised questions about aspects of Warsh’s sprawling financial disclosures.

Warsh will then deliver his own opening remarks, which may deviate from the prepared statement obtained by CNBC on Monday.

Each of the Banking Committee’s remaining 22 members — 12 Republicans and 10 Democrats — will get five minutes to question Warsh.

— Kevin Breuninger and Emily Wilkins