Trump's Fed Chair Nomination Sparks Controversy Over Potential Legal Threats

Fri Feb 06 2026 00:37:26 GMT+0200 (Eastern European Standard Time)

In a private dinner, Trump jokingly suggested suing his Federal Reserve nominee if he fails to lower interest rates, raising concerns among lawmakers about the independence of the Fed.

During a recent gathering, President Trump joked about potentially suing Kevin Warsh, his nominee for Federal Reserve chair, if he does not reduce interest rates. This comment was met with skepticism and concern from Senate Democrats and some Republicans, fearing it may undermine the Federal Reserve's independence. Treasury Secretary Scott Bessent remarked that any legal action would depend on the president, while Senator Elizabeth Warren expressed her disapproval, seeking assurances that Warsh would not face repercussions for rate decisions. The situation highlights increasing tensions between the Trump administration and the Fed, especially in light of ongoing investigations into the current chair, Jerome Powell.

WASHINGTON (AP) — Treasury Secretary Scott Bessent stated that it would be 'up to the president' to determine whether to pursue legal action against Kevin Warsh, Donald Trump’s nominee to head the Federal Reserve, should he fail to lower interest rates.

During remarks at a prestigious Alfalfa Club dinner, Trump humorously mentioned the possibility of suing Warsh if interest rates did not decrease. When later questioned by the media, he clarified that his suggestion was meant in jest, referring to the event as a roast: 'It was all comedy.'

Senator Elizabeth Warren, who is the ranking member of the Senate Banking Committee, challenged Bessent on Trump's statements during a recent committee hearing. Her concerns come on the heels of a series of unusual attacks from the Trump administration directed at current Fed chair, Jerome Powell.

Trump had initially nominated Powell in 2017, but subsequently criticized him after he raised interest rates the following year. Tensions escalated when it was revealed that the Department of Justice had subpoenaed the Fed in relation to an investigation concerning Powell's Senate testimony about a $2.5 billion building renovation.

Among Senate Republicans, apprehensions arose regarding the implications of Trump's remarks on the Federal Reserve's historic independence from political intervention. Senator Thom Tillis of North Carolina, who is retiring, disclosed that he will not support Warsh's nomination until the ongoing investigation into Powell concludes. This puts Warsh's nomination at risk of delay in the committee.

At the hearing, Warren pressed Bessent for a commitment that Warsh would not face lawsuits or investigations from the Justice Department over his decisions on interest rates. Bessent's response—that this ultimately depended on the president—led to an exchange where Warren expressed her disbelief, stating, 'That was supposed to be the softball!'

Furthermore, Senator Tillis presented a list of committee members who do not perceive any criminal intent from Powell. He remarked, 'I was actually a witness at the alleged scene of the crime... we didn’t see a crime.' Senator Tim Scott, R-S.C., head of the Senate Banking Committee, also distanced himself from Trump's narrative, asserting that 'ineptness or being incompetent is not a criminal act.'

This tense atmosphere reared its head for the second consecutive day in hearings focused on Bessent's annual report to the Financial Stability Oversight Council, with earlier interactions spiraling into conflicts as he faced questioning from Democratic lawmakers regarding fiscal policies and other critical issues.