Bessent urges Senate to start Warsh hearings even as Powell probe drags on

The Justice Department investigation into Jerome Powell is not only a legal headache for the Fed. It is now reshaping the politics around who runs the central bank next.

In comments reported over the weekend, Treasury Secretary Scott Bessent suggested the Senate Banking Committee should begin hearings for Kevin Warsh, the former Fed governor Trump nominated on Jan. 30 to succeed Powell, while the probe continues. Bessent argued Warsh is a well-known candidate who previously won broad support in the chamber and should not be kept in limbo by a separate fight. 

The bottleneck is Sen. Thom Tillis, a Republican on the Senate Banking Committee, who has said he will block all Fed nominations until the DOJ reaches what he called “the truth” about the Powell investigation. “I’d be one of the first people to introduce Mr. Warsh… but not before this matter is settled,” Tillis said in a CNBC interview. 

Tillis’s stance matters because the committee is closely divided. Republicans hold 13 of the 24 seats, and a single defection can change how the nomination advances and how much leverage Democrats gain in the process. 

The probe itself centers on costs tied to a multi-year renovation of Fed office buildings. The DOJ opened the investigation in early January, and Powell has pushed back publicly, calling it a political pretext aimed at influencing interest-rate decisions. 

Bessent has tried to thread the needle. In a recent CNBC appearance, he said senators did not see evidence of a crime, while also criticizing the situation as a bad look for the institution. The same interview also featured a dispute with Sen. Elizabeth Warren after Trump joked he might sue Warsh if rates do not fall. 

Next steps hinge on whether the Banking Committee sets a hearing date anyway, forcing Tillis to decide between blocking procedure or voting against a nominee he has signaled he could otherwise support. Either way, the Powell investigation is turning a routine confirmation into a test of how far Washington is willing to go in a fight over Fed independence.