WASHINGTON — President Trump’s nomination of Kevin Warsh to replace Jerome Powell as Federal Reserve chair has stalled in the Senate, blocked by a member of the president’s own party who says he will not allow any Fed nominee to advance until the Department of Justice resolves its criminal investigation of Powell. With Powell’s chairmanship expiring in May and no viable path to confirm Warsh, the United States faces the possibility of a leaderless central bank at a moment of significant economic uncertainty.
The standoff pits two Republican priorities against each other: the administration’s desire to install its chosen Fed chair and its simultaneous pursuit of a criminal probe that the nominee’s own party allies say has no legitimate basis.
The investigation traces back to June 25, 2025, when Chairman Powell testified before the Senate Banking Committee about a $2.5 billion renovation of the Marriner S. Eccles Federal Reserve Board Building in Washington. Under questioning, Powell denied that renovation plans included luxury features such as VIP dining rooms, special elevators, new marble installations, water features, and a roof terrace garden. The project’s cost had grown from an original estimate of $1.9 billion, according to CNN.
Rep. Anna Paulina Luna, R-Fla., formally referred Powell to the DOJ on July 19, 2025, alleging perjury and false statements. Luna claimed that official project documents submitted to the National Capital Planning Commission contradicted Powell’s testimony. The investigation was approved in November 2025 by Jeanine Pirro, U.S. Attorney for the District of Columbia, according to Fortune.
On January 9, 2026, the DOJ served grand jury subpoenas on Powell and other Fed officials. It was the first time in the Federal Reserve’s 113-year history that a sitting chairman faced potential prosecution from a presidential administration, according to PBS NewsHour. No criminal charges have been filed.
Two days after the subpoenas were served, Powell released a video statement on January 11 characterizing the probe as a pretext for political retaliation over interest rate decisions.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said in the statement.
Powell framed the dispute as a test of central bank independence. “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation,” he said.
Powell has stated he will not resign and that he intends to serve through the expiration of his chairmanship in May 2026. His term as a member of the Fed’s Board of Governors does not expire until January 31, 2028, meaning he could remain on the board as a governor even after his chairmanship ends.
The relationship between President Trump and Powell has been fraught for years. Trump appointed Powell as Fed chair in 2017, and the Senate confirmed him in early 2018 on a 22-1 Banking Committee vote. The relationship soured as the Fed raised interest rates, with Trump telling The Washington Post he was “not even a little bit happy” with his selection. In April 2025, Trump said Powell’s “termination cannot come fast enough,” according to CBS News. He later said he had “no intention” of firing Powell. In January 2026, Trump called Powell “that jerk” during a speech at the Detroit Economic Club, according to CNBC.
The Warsh nomination arrived on January 30, 2026, and with it came an immediate obstacle. Sen. Thom Tillis, R-N.C., a member of the Senate Banking Committee who is not seeking reelection, announced the same day that he would block all Fed nominees until the investigation is resolved.
“I will oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman, until the DOJ’s inquiry into Chairman Powell is fully and transparently resolved,” Tillis said in a statement.
“Protecting the independence of the Federal Reserve from political interference or legal intimidation is non-negotiable,” he added.
Tillis’s position carries unusual weight because of the Senate Banking Committee’s composition. Republicans hold a 13-11 majority on the committee. With Tillis refusing to vote for any Fed nominee, the result is a 12-12 deadlock that prevents Warsh’s name from reaching the Senate floor for a full vote, according to CNBC.
Senate Majority Leader John Thune acknowledged the math when reporters asked whether Warsh could be confirmed without Tillis’s support. “Probably not,” Thune said.
Tillis is not alone. Sen. Lisa Murkowski, R-Alaska, backed his position after speaking with Powell directly. “After speaking with Chair Powell this morning, it’s clear the administration’s investigation is nothing more than an attempt at coercion,” Murkowski said in a statement.
Other Republicans have expressed concern without explicitly joining the blockade. Sen. Kevin Cramer, R-N.D., said Powell “is a bad Fed Chair who has been elusive with Congress” but added, “I do not believe however, he is a criminal. I hope this criminal investigation can be put to rest quickly along with the remainder of Jerome Powell’s term,” according to NBC News. Sen. Susan Collins, R-Maine, said she “believe[s] strongly in the independence of the Federal Reserve” and called the potential indictment “not something I ever would have expected.”
The administration has attempted to find a resolution. Treasury Secretary Scott Bessent floated a proposal in early February to shift the Powell investigation from the DOJ to the Senate Banking Committee, effectively converting the criminal probe into a congressional oversight matter, according to CNBC.
Tillis rejected the offer.
“I have no intention of allowing any Fed board nominee to move forward out of committee and to be confirmed, until this matter is settled,” Tillis said in a Bloomberg TV interview on February 12. While he welcomed additional oversight of the renovation project, he maintained that the DOJ probe itself must be fully resolved before he would lift his hold. Tillis also said he would keep his block even if the DOJ agreed to drop the investigation in exchange for Powell leaving, according to CNBC.
Secretary Bessent has indicated he believes Banking Committee Republicans will proceed with a confirmation hearing for Warsh regardless of Tillis’s position. But a hearing without the votes to advance a nominee out of committee is largely symbolic.
Notably, Bessent himself expressed concern about the probe’s impact. He was reportedly “unhappy” with the decision to criminally investigate Powell, concerned it would negatively affect financial markets.
Administration supporters argue the investigation concerns legitimate questions of government accountability, not monetary policy. The $2.5 billion headquarters renovation represents a $600 million cost overrun from the original $1.9 billion estimate. The DOJ probe alleges Powell’s testimony about the project’s features was inaccurate and that official project documents submitted to the National Capital Planning Commission contradicted his statements to the Senate.
Rep. Luna’s referral pointed to specific discrepancies between Powell’s denials and planning documents related to VIP dining rooms, premium marble, water features, and a roof terrace garden. Luna also claimed Powell falsely stated the Eccles Building “never had” a serious renovation, despite a major overhaul between 1999 and 2003.
No institution is above congressional oversight, and cost overruns on a $2.5 billion public project are a legitimate subject of inquiry. The question at the center of the standoff is whether a criminal investigation of a sitting Fed chair, approved by a presidential ally who heads the D.C. federal prosecutor’s office, is the appropriate vehicle for that oversight, or whether it serves a different purpose.
The probe triggered a response that crossed party lines and international borders. On January 12, a joint statement signed by former Fed chairs Alan Greenspan, Ben Bernanke, and Janet Yellen, along with former Treasury Secretaries Henry Paulson, Timothy Geithner, Robert Rubin, and Jacob Lew, called the investigation “an unprecedented attempt to use prosecutorial attacks to undermine” Fed independence, according to CNBC.
The former officials drew a sharp comparison. “This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly,” they wrote. “It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.”
The following day, an unprecedented joint statement from international central bank leaders declared “full solidarity” with Powell. Signatories included ECB President Christine Lagarde and Bank of England Governor Andrew Bailey, along with central bank chiefs from Brazil, Switzerland, Sweden, Denmark, South Korea, Australia, and Canada, according to the ECB. They affirmed that central bank independence is “a cornerstone of price, financial and economic stability.”
The nominee caught in the crossfire is Kevin Warsh, 55, a former Fed governor and Morgan Stanley investment banker who served as an economic aide in the George W. Bush administration. He was the youngest Fed governor in history when appointed at age 35, serving from 2006 to 2011 and playing a central role as the board’s liaison to financial markets during the 2008 financial crisis, according to CNBC.
Warsh currently serves as Shepard Family Distinguished Visiting Fellow at the Hoover Institution and lecturer at the Stanford Graduate School of Business.
Tillis has gone out of his way to note that his blockade is not about Warsh personally. He called Warsh a “qualified nominee with a deep understanding of monetary policy,” according to CNBC. Warsh holds a J.D. from Harvard Law School rather than a Ph.D. in economics, which is unusual for a Fed chair. “The Fed’s culture is Ph.D. economists on top,” noted Aaron Klein, speaking to PBS NewsHour. But supporters point to his direct experience at the Fed. “He’s not some outsider…he has been at the Fed,” said Mark Gertler, an economics professor at New York University.
Warsh has historically been considered a monetary policy hawk and a consistent opponent of quantitative easing. More recently, he argued in a November 2025 Wall Street Journal piece that the Fed should lower rates, driven by his view that productivity gains warranted greater easing.
Financial markets have reacted to both the investigation and the nomination uncertainty. When the probe became public in January, gold surged to a record near $4,630 per ounce on January 12 before stabilizing above $4,600. Stocks were more muted; the S&P 500 rose 0.16% and the Dow gained 0.17%, both reaching new all-time intraday highs on January 12.
The Warsh nomination day on January 30 told a different story. The Dow fell 519 points, or 1.06%. The S&P 500 dropped 0.78% and the Nasdaq fell 1%. Gold futures sank more than 11% and silver futures plunged more than 31%, while the dollar rallied and the Treasury curve steepened.
The divergent reactions capture the tension. The initial market read on the probe was that it would not change Fed policy. The nomination day sell-off reflected concerns about the broader uncertainty surrounding who will lead the Fed and when. Carsten Menke of Julius Baer noted that “increased interference with the Fed is a key bullish wildcard for precious metals in 2026.”
Goldman Sachs’ top economist said the probe would not alter Fed decisions, which will continue to be “based on employment and inflation,” according to Fortune.
The math of this standoff is unforgiving. Powell’s chairmanship expires in May. The Banking Committee is deadlocked 12-12 without Tillis. Even if the administration found a way to bypass the committee, four Republican no votes on the Senate floor would sink the nomination, assuming all Democrats vote against. Tillis and Murkowski already account for two.
Historical precedent offers limited guidance. The last time a Fed chair was replaced against his will was in 1948, when President Truman removed Marriner Eccles. Eccles continued serving as a governor until 1951. The Nixon-era pressure on Fed Chair Arthur Burns to adopt expansionary policy before the 1972 election led to high inflation and lasting economic damage. A University of Maryland study found that political pressure on the Fed at even half the level Nixon applied, sustained for six months, raises the U.S. price level by more than 8%.
The open questions are significant. If no successor is confirmed by May, succession mechanics become untested territory. Board members of independent agencies can only be removed “for cause” under the 1935 Supreme Court ruling in Humphrey’s Executor v. United States, which affirmed Congress’ authority to insulate independent agency leaders from presidential removal. The Federal Open Market Committee technically has the power to select its own chair.
The administration must decide whether the Warsh nomination or the Powell investigation is the higher priority. As currently structured, it cannot have both.
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