WASHINGTON — Opposing a nominee to lead the Federal Reserve is familiar territory for Massachusetts Senator Elizabeth Warren.
She voted against confirming current Fed Chair Jerome Powell twice, including after President Joe Biden, her fellow Democrat, nominated him for a second four-year term. Before that 2022 vote, Warren said Powell had serious shortcomings in financial regulation oversight and branded him “a dangerous man to head up the Fed.”
But Warren told the Globe Wednesday that President Trump’s nomination of Kevin Warsh has made the threat existential.
If Warsh is confirmed, she warned, he could destroy the central bank’s independence on monetary policy, a core tenet designed to keep Fed officials from making interest rate decisions based on politics instead of economics.
And as the top Democrat on the Senate Banking Committee, which must approve Warsh’s nomination, Warren is leading the attempt to derail it — a difficult task because Republicans hold the majority.
“Through the years, many presidents, both Democrats and Republicans, have complained about the Fed ... but they’ve all respected that the Fed makes its own decisions,” she said. “What makes this a moment in history unlike any other is that Donald Trump has launched an all-out public assault to take over the Fed. That’s what makes this nomination so much more dangerous than any that preceded it.”
Political interference in pursuit of a temporary economic jolt from lower interest rates has been a recipe for high inflation in other countries. But Warren said she fears that’s exactly what Trump is risking in trying to exert his influence on the Fed heading toward November’s midterms.
“It’s a desperate Hail Mary before the election, an effort to try to get some short-term boost in the economy that will have terrible long-term consequences,” she said. “But it’s all that he’s got left in his bag of tricks.”
The selection of Warsh, a former Fed board member, comes after Trump’s unprecedented campaign to pressure Powell to resign before his term as chair ends in May — even though Powell is a Republican who was first appointed as Fed chair by Trump. The president has publicly called Powell a “stubborn moron,” “stupid,” and a “dummy,” among other putdowns, because he hasn’t lowered interest rates as much as Trump wants.
Powell and most Fed officials who vote on monetary policy have taken a more cautious approach. They’re still scarred from their slow reaction to the four-decade high inflation that hit in 2022 after the economy reopened from the pandemic. And they have continued to be wary since Trump took office because his historically high tariffs have helped push prices for many goods higher after inflation had been trending down the past few years.
Trump responded angrily.
He tried to fire Fed Governor Lisa Cook last summer — an unprecedented attempt to remove a central bank official for cause — after the Justice Department launched a criminal investigation of her for alleged mortgage fraud. The Supreme Court allowed Cook to stay in her job while it considers her legal challenge.
Then in January, Powell revealed that the Justice Department had launched a criminal investigation into whether he lied to Congress about the renovation of the Fed’s historic Washington headquarters. The move sparked bipartisan outrage.
Powell posted a video saying it was spurred by the insistence of Fed officials on “setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.” The three living former Fed chairs joined a bipartisan group of former top government economic officials in releasing a statement blasting the criminal inquiry as “an unprecedented attempt to use prosecutorial attacks to undermine” the central bank’s independence.
The controversy made it difficult for Trump to nominate one of his reported finalists for Fed chair — top White House economic adviser Kevin Hassett — because close ties to the president could have caused problems among Senate Republicans concerned about the central bank’s independence.
Warsh didn’t carry that baggage.
A Harvard Law graduate with experience on Wall Street, he is a visiting economics fellow at the conservative-leaning Hoover Institution think tank and a lecturer at Stanford University’s business school. Trump called him “the central casting guy that people wanted.”
Warsh did not respond to an email request for comment. White House spokesperson Kush Desai said Democrats should stop playing “political games.”
“Kevin Warsh’s nomination to the Federal Reserve has been resoundingly endorsed by business and political leaders because his academic credentials, private sector success, and experience on the Fed Board of Governors are unimpeachable,” Desai said in a statement.
Republicans have largely praised the nomination, which also drew the approval of economists like Mark Zandi and Jason Furman.
Senate Banking Committee chair Tim Scott of South Carolina said Warsh “has deep knowledge of markets and monetary policy.” South Dakota Senator Mike Rounds, another committee member, said Warsh appears “very well qualified.”
But Warren called Warsh no better than Hassett on the crucial issue of Fed independence because of efforts in recent months to appeal to Trump.
Warsh had a long reputation as a monetary policy “hawk” — someone who puts a greater value on preventing high inflation than stimulating job growth with lower interest rates. But as Trump began searching for Powell’s replacement last year, Warsh began advocating for the lower interest rates the president wants and dismissing the Fed’s inflation concerns.
“The president’s policies are working. His policies are leading to stronger growth and lower prices,” Warsh told Fox Business in October, when the annual inflation rate had been rising for several months since Trump announced his tariffs. “I wish I could say the same about the Federal Reserve.”
Warren said that abrupt conversion disqualifies Warsh.
“He has taken 15 years of his consistent view on inflation and interest rates and turned them on a dime in order to bow down to Donald Trump,” Warren said.
Trump told reporters on Friday that he had not asked Warsh to commit to pushing to cut interest rates if confirmed because such a question was “inappropriate, probably.”
“I want to keep him nice and pure,” Trump said. “But he certainly wants to cut rates. I’ve been watching him for a long time.”
But the criminal investigation into Powell could be a problem.
Senator Thom Tillis, a North Carolina Republican on the banking committee, called Warsh “a qualified nominee with a deep understanding of monetary policy.” But Tillis, who is stepping down at the end of the year, has vowed to oppose any Fed nomination until the Powell investigation “is fully and transparently resolved.”
If all Democrats on the committee oppose Warsh, a “no” vote from Tillis would kill the nomination.
“I’m not budging one inch,” Tillis told reporters Tuesday. “This is foundational to Fed independence.”
Echoing Tillis’s concerns, Warren organized a letter to Scott from all the committee’s Democrats demanding a delay to proceedings on Warsh’s nomination until the Powell and Cook criminal investigations have been closed. But Scott predicted on Fox Business Wednesday that Tillis’s concerns would be resolved and said the odds of a Warsh confirmation were “100 percent.”
Still, Warren said she’s going to hammer Warsh as a threat to Fed independence and warn that its loss could lead to higher prices for Americans.
“I‘m working hard to make this a very public fight,” she said. “Donald Trump has made clear he wants a sock puppet running the Federal Reserve, and Kevin Warsh has proven he is that sock puppet.”
Jim Puzzanghera can be reached at jim.puzzanghera@globe.com. Follow him @JimPuzzanghera.