Trump’s efforts to control the Fed may jeopardize new chair’s confirmation

Summary

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Episode Overview

Theme:
This episode dives into President Trump’s recent nomination of Kevin Warsh as the next chair of the Federal Reserve. The conversation unpacks why Trump’s approach to influencing the Fed signals possible threats to its traditionally independent role, how DOJ investigations are stalling the confirmation process, and the political dynamics around the future of U.S. monetary policy.

Purpose:
To help listeners understand the stakes behind Trump’s nomination, examine the pressures and expectations on Warsh, and discuss how political interference could shape both the confirmation process and the Fed’s role moving forward.

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Key Discussion Points & Insights

1. The Federal Reserve: What It Does and Why Independence Matters

• Federal Reserve 101:

  • The Fed was established over a century ago to stabilize the banking system and fight both unemployment and inflation through interest rate adjustments.
  • "The thing that most people know the Fed for is that it adjusts interest rates either up or down in an effort to promote maximum employment and stable prices." —Scott Horsley [01:04]

• Importance of Independence:

  • Independence shields the Fed from short-term political interests favoring quick economic boosts over sound, long-term policy.
  • "Sometimes the Fed, in doing what's in the long-term interest of the economy, has to make decisions that are unpopular in the short term... Experience... has shown that it's best to put a little bit of distance between elected politicians... and the Fed." —Scott Horsley [02:08]

Memorable Moment:
The hosts emphasize that while the Fed is accountable to Congress, "they're not supposed to basically take instructions from the White House." —Scott Horsley [02:55]

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2. Trump’s Relationships with the Fed and Jerome Powell

• Conflict History:

  • Trump has repeatedly tried to pressure Powell into lowering interest rates, calling him names and even demanding his resignation when Powell did not comply.
  • Trump's Justice Department recently launched a criminal investigation into Powell, widely perceived as political pressure to force a rate cut.
  • "Trump has just been relentless in trying to pressure Powell to lower interest rates... it's not just rhetoric from Trump. Trump’s DOJ has now kind of launched a criminal investigation into Powell, which many, many critics see as another effort to pressure Powell..." —Franco Ordonez [03:46]

• DOJ Investigation's Pretext:

  • The investigation focuses on cost overruns in the Fed's headquarters renovation, but most observers (including Powell) see it as leverage over Fed decisions.
  • "Powell himself has said that's all just a pretext. This is a way to try to bully and intimidate the Fed into doing the president's bidding." —Scott Horsley [06:00]

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3. Senate Backlash: Defending Fed Independence

• Senator Thom Tillis’ Stand:

  • Tillis, influential on the Senate Banking Committee, declared he will not advance any Fed nominee until the DOJ investigation is transparently resolved.
  • "He also said that the independence of the Federal Reserve from political interference was non-negotiable." —Franco Ordonez [06:43]

• Potential Roadblocks for Warsh:

  • Tillis explicitly stated he would block even a qualified nominee like Warsh if the investigation remains unresolved.
  • "He will not approve any Fed nominee, including a nominee for chair, until this Justice Department matter is resolved in some transparent way..." —Scott Horsley [07:15]

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4. Who is Kevin Warsh?

• Background:

  • Warsh is a traditional Republican with a background in Wall Street and prior Fed board experience under Bush and Obama.
  • Past reputation as a "hawk," focused on combating inflation, even amid high unemployment post-Great Recession.
  • "Warsh’s reputation was as someone who would really bend over backwards to keep inflation under control." —Scott Horsley [09:52]

• The Big Question: Will Warsh Resist Trump?

  • Trump says Warsh never promised to comply, but chose him for his perceived alignment.
  • "A lot of people... just are questioning whether Warsh will resist Trump." —Franco Ordonez [10:54]
  • There are concerns Warsh may be pressured to drop rates, which could risk rising inflation.
  • Trump has a history of turning on Fed chairs who show independence—exemplified by his fallout with Powell.

Memorable Moment:
"He may be calling him straight out of central casting now, but as we have covered Trump for many, many years, those relationships can sour very, very quickly." —Franco Ordonez [11:29]

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5. The Limits of the Fed Chair and How Trump Tries to Stack the Board

• Fed Chair is One Vote:

  • The Fed chair alone cannot dictate policy; their influence is limited by other Board members.
  • "The Fed chair is not a king... just one vote." —Tamara Keith [12:48]

• Trump’s Attempt to Stack the Board:

  • Trump is seeking to appoint loyalists to multiple Fed seats, though with mixed success.

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6. The Road Ahead: Confirmation Math and Political Stakes

• Senate Dynamics:

  • With Tillis threatening to block nominees and a divided Senate Banking Committee, Warsh’s confirmation is difficult if the DOJ probe isn’t resolved.
  • "It would be very difficult assuming the Democrats stick together and oppose the nomination..." —Scott Horsley [14:53]

• Could Pressures Change?

  • The hosts note Trump could likely “call off” the DOJ investigation, satisfying senators like Tillis, which would allow the nomination to proceed.
  • Otherwise, Powell could remain as chair on an interim basis.

Notable Quote (Trump’s Response to Tillis):
"If he doesn't approve, we'll just have to wait till somebody comes in that will approve it." —Donald Trump, relay via Scott Horsley [13:51]

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Notable Quotes & Memorable Moments (with Timestamps)

• "The Federal Reserve raises interest rates when they get nervous that inflation is too high. They tend to lower interest rates when they're worried that unemployment is rising. And it's a way to goose the economy." —Scott Horsley [01:08]
• "The independence of the Federal Reserve from political interference was non-negotiable." —Franco Ordonez, quoting Senator Tillis [06:43]
• "He may be calling him straight out of central casting now, but ... those relationships can sour very, very quickly." —Franco Ordonez on Trump and Warsh [11:29]
• "The Fed chair is not a king... just one vote on the Federal Reserve Board." —Tamara Keith [12:48]
• "If he doesn't approve, we'll just have to wait till somebody comes in that will approve it." —Donald Trump (quoted by Scott Horsley) [13:51]

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Timestamps for Important Segments

• Federal Reserve 101 & Independence: [01:00–03:14]
• Trump’s campaign to influence Powell: [03:14–04:48]
• Senator Tillis blocks confirmation over DOJ probe: [06:21–07:42]
• Kevin Warsh’s background & the independence dilemma: [09:27–11:51]
• Trump’s Senate confirmation math and outcomes: [13:15–15:34]

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Conclusion

This episode provides a thorough examination of President Trump’s efforts to control the Federal Reserve through both personnel decisions and alleged political pressure. The hosts, while explaining the structural importance of an independent Fed, highlight the tense confirmation path facing Kevin Warsh and the Senate standoff fueled by political maneuvering. Through accessible explanations and punchy political anecdotes, the podcast explores how ongoing gamesmanship poses risks for U.S. economic stewardship.

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Transcript

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[Tamara Keith]

Hey there. It's the NPR Politics podcast for Monday, February 2, 2026. I'm Tamara Keith. I cover the White House.

[Franco Ordonez]

I'm Frank Ordonez. I also cover the White House.

[Tamara Keith]

And NPR's chief economics correspondent Scott Horsley is also here. Welcome back, SC Great to be with y'.

[Scott Horsley]

All.

[Tamara Keith]

Yeah. And we are recording this podcast at 1:04pm Eastern Time. Today on the show, President Trump has named his choice to replace Jerome Powell as chair of the Federal Reserve. What do you need to know about his pick, Kevin Warsh, and what stands between him and Senate confirmation? But Scott, before we get into Warsh, let's do a little Federal Reserve 101, if you will remind us what the Fed actually does.

[Scott Horsley]

Yeah. The Federal Reserve was set up by Congress more than a century ago after a series of bank panics. It was set up to sort of be the lender of last resort. It has some regulatory functions overseeing banks in the country. But the thing that most people know the Fed for is that it adjusts interest rates either up or down in an effort to promote maximum employment and stable prices. That is, it's trying to fight unemployment and inflation. The Federal Reserve raises interest rates when they get nervous that inflation is too high. They tend to lower interest rates when they're worried that unemployment is rising. And it's a way to goose the economy. And in setting up this institution, Congress deliberately created the Fed to be independent of political pressure from the White House.

[Tamara Keith]

And we've used the phrase independence a lot in the last year. But can you just explain why it's important for the Federal Reserve to be insulated from politics?

[Scott Horsley]

Right. So in general, elected politicians would prefer to have interest rates low to kind of goose the economy before the next election and have people feeling good about where things are and make it cheaper for people, families and businesses to borrow money. But that can have long term adverse consequences. It can lead to more inflation in the long run. So sometimes the Fed, in doing what's in the long term interest of the economy, has to make decisions that are unpopular in the short term, like keeping interest rates high to counteract inflation. And so experience, not only in this country but around the world, has shown that it's best to put a little bit of distance between elected politicians who always want to do what's best in the short run, or who usually want to do what's best in the short run so that the Fed can make decisions that are in the best interest of the economy in the long run. And we talk about that as Fed independence. It doesn't mean that they're completely untethered to the political system. The Fed has to answer to Congress. The Fed chairman goes before congressional committees twice a year and has to issue reports and so forth. But they're not supposed to basically take instructions from the White House.

[Tamara Keith]

So, Franco, President Trump has been very vocal about his desire for the Fed to lower interest rates. He doesn't seem to be all that into the idea of Federal Reserve independence. Can you just, like, take us through the last year of Trump Fed relations?

[Franco Ordonez]

Yeah, I think if Trump had his way, Powell would definitely be taking instructions from Trump. And Powell's obviously not been doing that. And because of that, their relationship has been not good. Very not good. I mean, it's been a really tough year. I mean, Trump has just been relentless in trying to pressure Powell to lower interest rates. And he's calling him names like, too late. Powell is calling him a moron for what Trump claims are keeping the rates artificially high. Trump's called for his resignation. And more recently, it's not just rhetoric from Trump. Trump's DOJ has now kind of launched a criminal investigation into Powell, which many, many critics see as another effort to pressure Powell to lower the rates. And Powell himself has said this is an effort to press him to lower rates. And Trump has gone after members of the Federal Reserve's Board of Governors, like Lisa Cook, you know, in an effort to replace her with more friendly governors, which is another example of how Trump is trying to put pressure on the Fed to lower interest rates.

[Tamara Keith]

And the case involving Lisa Cook was before the US Supreme Court. Can we talk just a little bit more about this investigation that was launched by the Justice Department? We heard about it, I think, because Jerome Powell put out an essentially unprecedented video criticizing the investigation.

[Scott Horsley]

That's right. So the. The Federal Reserve is in the midst of a big renovation of its headquarters building here in Washington, and there have been some significant cost overruns on that project. It was supposed to cost 1.9 billion. It looks like it's going to cost more like two and a half billion. Now, the Fed says that's largely because they discovered some unexpected problems. More asbestos than they thought they were going to have. There's water under the building they have to deal with. It just turned into a bigger construction project. The other thing is that the estimates were done in 2019. And in the years since then, building costs of all kinds have gone up a lot. So it is costing a lot more money than they expected to pay when they started. And Jerome Powell was grilled about that before a Senate committee last year. And the DOJ is ostensibly investigating discrepancies between what Jerome Powell said during that Senate hearing and what the records show about the renovation project. But again, Powell himself has said that's all just a pretext. This is a way to try to bully and intimidate the Fed into doing the president's bidding on interest rates. And I think most independent observers do think that it's more the latter than a serious investigation of any real wrongdoing.

[Tamara Keith]

And Franco, that leads us to Senator Thom Tillis, a Republican from North Carolina who is retiring after this term. And he has been quite vocal in defending Fed independence. And so when Warsh's name was announced, he made his position very clear.

[Franco Ordonez]

You know, he actually called Warsh a qualified nominee with, you know, quote, deep understanding of monetary policy. But he also said that the independence of the Federal Reserve from political interference was non negotiable. And that speaks to what Scott is saying in Tillis view and many critics views that this criminal investigation of the Fed is seen as political interference and legal maneuvering and doesn't have any real basis.

[Scott Horsley]

And Senator Tillis had said we should say he sits on the powerful Senate Banking Committee, which will have to vote on any Fed nominee. And he said he will not approve any Fed nominee, including a nominee for chair, until this Justice Department matter is resolved in some transparent way. And so even though he doesn't have any real qualms with Kevin Warsh as an individual, Tillis is willing to block his ascension to the Fed chairmanship unless this DOJ case is resolved.

[Tamara Keith]

All right. Well, we're going to take a quick break. We'll have more on the politics of this in a moment.

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[Franco Ordonez]

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[Tamara Keith]

President Trump says he wants to make America skilled again, but tradeswomen worry that his crackdown on DEI will undo decades of progress. You cannot look at the workforce of the construction trades and say they've taken DEI too far. This weekend on THE Sunday story, what role is there for women in the skilled trades renaissance? Listen now to the Sunday story on the up first podcast from npr. And we're back. And just a reminder that if you don't want to miss any of our political analysis, make sure to hit that follow button in your favorite podcast app. We've been talking about the Federal Reserve. President Trump has named Kevin Warsh to take over as chairman of the Fed when Jerome Powell's term ends in May. So, Scott, what should we know about Warsh?

[Scott Horsley]

Well, Warsh is a sort of traditional Republican. He worked in the George W. Bush administration. He has experience at the Federal Reserve. He was on the board of governors during the Bush and part of the Obama administrations. He had a background on Wall Street. His reputation the last time he served on the Fed board was as a hawk. That means he was particularly concerned about runaway inflation. Even during the aftermath of the Great Recession, when unemployment crept up towards 10%, Kevin Warsh was very concerned that some of the aggressive steps the federal was taking to address that and the rest of the government was taking to address that might lead to runaway inflation. Now, those fears at the time turned out to be unfounded, but Warsh's reputation was as someone who would really bend over backwards to keep inflation under control. So it's kind of interesting to now have President Trump picking him to push in the opposite direction, that is for lower interest rates, even if that might run the risk of letting inflation become more entrenched.

[Tamara Keith]

Franco, has the president talked about this at all, talked about whether Warsh is going to do what he wants?

[Franco Ordonez]

Yeah, Trump says they have talked about it, but that Warsh has never committed to doing specifically what Trump wants. But look, Trump's not going to pick someone who he doesn't have a strong sense that he is going to do this. And I think that's kind of one of the challenges that Warsh faces because a lot of people, people just are questioning whether Warsh will resist Trump. I mean, Scott's talking about his history, and certainly his history speaks to independence. But I think there are huge, huge questions that critics are watching, Congress is watching is how Independent. Can he be? Can he fight off Trump's campaign for lowering interest rates? If WARSH does go in and lower interest rates, is it going to be enough? Or at least is it going to be as much as Trump wants? And I think it's very, very likely that Trump eventually is not going to be happy. He may be calling him straight out of central casting now, but as we have covered Trump for many, many years, those relationships can sour very, very quickly.

[Scott Horsley]

Yeah, Trump nominated Jerome Powell back in his first term as president to be Fed Chair. And I think he might have used that same central casting language to talk about him. And of course, they. They ran afoul of one another when Powell didn't do Trump's bidding during his first term in office either. I think almost anyone who got this nod would have to face some tough questions during their confirmation hearing about how much independence they could exercise, because Trump has said very clearly he thinks the Fed should follow his instructions when it comes to interest rates, that he would only nominate someone who agreed with him on the need for lower interest rates. You know, there's an economist at the White House, Kevin Hassett, the other Kevin, who was very much in the running for this. And I think the sense on Capitol Hill was that Kevin Hassett might have been even closer to the president and therefore less likely to exercise some independence that may have ultimately sort of torpedoed Kevin Hassett's chances of the job.

[Tamara Keith]

Yeah. And I guess we should mention that the Fed chair is not a king like the Fed chair is just one vote on the Federal Reserve Board, so that, you know, that that mitigates the ability of the president or anyone else to make it be so.

[Scott Horsley]

I guess that's right. And that's why Trump has tried to stack the deck in other ways by installing other loyalists on the board. He has not been entirely successful at that, but he hasn't given up the effort.

[Tamara Keith]

So let's talk about the Senate bar Require Senate confirmation. Franco, as we mentioned earlier in the show, North Carolina Republican Senator Thom Tillis said he won't vote on any Federal Reserve Chair nominee until the Justice Department drops its investigation into Powell and the Fed. What has President Trump said about this?

[Franco Ordonez]

Yeah, Trump was asked about this last week in the Oval Office here at the White House, and Trump essentially called Tillis an obstructionist. Actually, here is a little bit of what he said.

[Scott Horsley]

You know, that kind of thinking is why he's no longer a senator. You know, he's going to be out of office. It's too bad. I always liked Senator Tillis, actually, but he did some things that were not smart and whatever. I mean, you know, if he doesn't approve, we'll just have to wait till somebody comes in that will approve it.

[Franco Ordonez]

Right now Tillis is going to be retiring at the end of his term. That end of his term is not for, you know, practically a year. So a very curious statement to wait that long. I just don't see Trump doing that. But, you know, as we've been talking, this criminal investigation, you know, I would not be surprised if all of a sudden we hear that it's no longer happening, that, you know, something was resolved. And I think if that is lifted, that would likely satisfy Tillis and the Warsh nomination could move forward.

[Tamara Keith]

Scott, can you do a little of the math for us? If Tillis isn't persuaded, can Warsh make it through?

[Scott Horsley]

I think it would be very difficult assuming the Democrats stick together and oppose the nomination, either because they're concerned about FedEx independents or in some cases they might have concerns about Warsh personally. But yeah, it'd be hard to get out of the Banking Committee without a vote of one of the Republicans. The Republicans have a very narrow majority on that committee, just as they have a narrow majority in the Senate writ large. But as Franco points out, you know, the president can call off this Justice Department investigation with a phone call if that's what he wants to do. And the alternative is leaving Jerome Powell as chairman because while Powell's term expires in May, until there's a new chairman confirmed, he can stay on as chairman. So, you know, that's the option that Trump would be entertaining if he decides to just wait. Senator Tillis out.

[Tamara Keith]

Okay. Let's leave it there for today. Scott, thank you so much for joining us.

[Scott Horsley]

Great to be with you all.

[Tamara Keith]

I'm Tamara Keith. I cover the White House.

[Franco Ordonez]

I'm Franco Ordonez. I also cover the White House.

[Tamara Keith]

And thank you for listening to the NPR Politics podcast. On NPR's wild card podcast, Oprah on the art of being alone. Are you good at being alone? Oh, my God, I'm a master at it. Tell me more.

[Scott Horsley]

I cherish it. I revel in it. I can't wait to be alone.

[Tamara Keith]

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