Senate Minority Leader Chuck Schumer (D-N.Y.) and Senate Banking Committee ranking member Elizabeth Warren (D-Mass.) sent a letter Thursday to Federal Reserve chair nominee Kevin Warsh, pressing him on whether he has signed a loyalty pledge to President Trump.
“We seek to understand the extent to which President Trump — who has stated that ‘anybody that disagrees with me will never be the Fed Chairman’ and bemoaned potential ‘disloyalty’ amongst appointees — demanded, either implicitly or explicitly, that you do his bidding as a condition of your appointment,” the senators wrote in the letter shared exclusively with Yahoo Finance.
They also asked Warsh to confirm or deny reporting that Trump asked if he could trust Warsh to lower interest rates if appointed as Fed chair. Yahoo Finance reached out to Warsh for comment but did not immediately hear back.
Trump nominated Warsh to be the next chair of the central bank on Jan. 30. Republican Sen. Thom Tillis of North Carolina has vowed to block Warsh’s confirmation until a criminal investigation into current Fed Chair Jay Powell is resolved.
Warsh served as a Fed governor from 2006 to 2011. During his tenure, he routinely raised concerns about inflation and protecting central bank credibility by ensuring inflation expectations remained anchored, even as he regularly voted to either hold interest rates steady or lower them.
While seen as an inflation hawk and data-driven practitioner, Warsh has more recently advocated for lower interest rates, arguing that the Fed should “discard its forecast of stagflation” and predicting that AI will be a “significant” force that boosts productivity and pushes down inflation, allowing for lower rates.
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An independent body?
The letter from Schumer and Warren seeks to keep a spotlight on the issue of Fed independence, which has been under overt pressure from Trump since the start of his second term.
In addition to the criminal probe involving Powell, Trump’s rhetoric has left little doubt about how he expects the next Fed chair to lead monetary policy.
Trump told NBC News last week that there’s “not much” doubt in his mind that interest rates would soon be lowered. Pressed about how he could be so sure, he said, “I just think they’re going to be lowered. I mean, they should be lower.”
On whether he believes the Fed chair answers to the president or heads an independent body, Trump said, “Well, I mean, in theory it’s an independent body.”