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WASHINGTON (AP) — Treasury Secretary Scott Bessent has indicated that the decision to pursue legal action against Kevin Warsh, President Donald Trump’s nominee for the Federal Reserve chair, would rest solely with the president. This comes amid President Trump’s recent comments regarding interest rates.
At a private black-tie event hosted by the prestigious Alfalfa Club on Saturday evening, President Trump humorously suggested that he might consider suing his newly appointed Fed chair nominee if interest rates are not reduced. When questioned by reporters later, Trump clarified that his comments were intended as a joke, stating, “It’s a roast. It was all comedy.”
However, during a Senate Banking Committee hearing on Wednesday, Senator Elizabeth Warren of Massachusetts, the committee’s ranking member, confronted Secretary Bessent about Trump’s remarks. This inquiry follows the administration’s unusual criticism and legal scrutiny aimed at current Federal Reserve Chair Jerome Powell.
Trump initially appointed Powell in 2017, but their relationship soured following Powell’s decision to increase interest rates in 2018. Since returning to office, Trump has frequently criticized Powell’s actions.
Last month, Powell disclosed that the Department of Justice had issued a subpoena to the Federal Reserve as part of an investigation into his Senate testimony from June. The testimony included discussions about the Fed’s $2.5 billion building renovation project.
The investigation has raised concerns among some Senate Republicans about the Trump administration’s willingness to threaten the Fed’s longtime independence from day-to-day politics. Sen. Thom Tillis, a North Carolina Republican who is retiring at the end of this year, has said he won’t vote to approve Warsh until the investigation into Powell is resolved. Without Tillis’ support, Warsh’s nomination could get held up in the committee.
At the hearing, Warren asked Bessent to commit that Warsh would not be sued or investigated by the Justice Department if he doesn’t cut interest rates.
“That is up to the president,” Bessent responded. The two began to argue over each other, as Bessent said the president was joking.
“That was supposed to be the softball!” Warren said in astonishment.
Later, when asked about Bessent’s remarks on Trump suing Warsh, Tillis said: “even stipulating that that could happen and that it’s not a bad idea is troubling to me.”
During the hearing, Tillis submitted a list of members of the committee who indicated they didn’t see criminal intent on the part of Powell.
“I was actually a witness at the alleged scene of the crime,” Tillis said during the hearing, and “we didn’t see a crime.”
On Wednesday, Sen. Tim Scott, R-S.C., who leads the Senate Banking Committee, also broke ranks with the Trump administration and told Fox Business, “Ineptness or being incompetent is not a criminal act.”
It was the second consecutive day of hearings for Bessent about the annual report by the Financial Stability Oversight Council.
Bessent’s first hearing with the House Financial Services Committee devolved into insults as Bessent clashed with Democratic lawmakers over fiscal policy, the business dealings of the Trump family and other issues.
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