A New Leader — and a New Showdown — at the Fed

Justice Department Probe Backfires

The administration launched a criminal investigation into Powell over Fed building renovations to pressure him to resign, but the spurious probe drew judicial criticism and Senate opposition instead.

Senator Tillis Blocks Confirmation

Republican Senator Tom Tillis withheld his support for any Fed nominees until the investigation ended, using his pivotal Banking Committee vote to force Trump to choose between revenge and replacement.

Investigation Dropped for Nomination

Facing a deadline with Powell’s term ending May 15th, US Attorney Janine Pirro dropped the probe in late April, allowing Warsh’s confirmation to proceed while reserving the right to restart it.

Breaking Historical Precedent

Powell announced he will remain as a Fed governor after his term as chair expires, the first such move since the 1940s and directly against the president’s explicit wishes.

Blocking Presidential Influence

By occupying a governor seat, Powell prevents Trump from appointing another ally to the seven-person board, reducing the administration’s ability to control monetary policy and staffing.

Threshold for Departure Not Met

Powell stated the investigation lacks 'transparency and finality,' and that ongoing political attacks left him 'no choice' but to stay and safeguard the institution from politicization.

A Critic Takes the Helm

Kevin Warsh, confirmed as Fed Chair, previously served from 2006-2011 and resigned over disagreements regarding the Fed’s interventionist crisis-era policies.

Opposition to Balance Sheet Expansion

Warsh argues the Fed’s $6.5 trillion balance sheet exacerbates inequality and risks inflation, advocating for interest rate tools over the asset purchases Powell oversaw.

Uncertain Power Sharing Ahead

The arrangement creates an awkward scenario where the former chair remains as a governor down the hall from his successor, who has publicly called for 'regime change' at the Fed.