Sen. Thom Tillis Drops Blockade of Kevin Warsh Fed Nomination

Sen. Thom Tillis said Sunday he is willing to end his blockade of Federal Reserve chair nominee Kevin Warsh after the U.S. Department of Justice dropped its criminal investigation of Fed Chair Jerome Powell.

Warsh now has a clear path to replacing Powell as the next leader of the Fed when Powell's term expires in mid-May. The Senate Banking Committee is set to vote on his confirmation on Wednesday, and the full Senate could take it up shortly after.

With Tillis's support, Warsh's confirmation is all but assured.

"I am prepared to move on with the confirmation of Mr. Warsh, I think he's going to be a great Fed chair," Tillis, R-N.C., said on NBC's "Meet the Press." "We were very clear that we have assurances from the DOJ that I needed to make sure they were not using the DOJ as a weapon to threaten the independence of the Fed. So this will allow Mr. Warsh to move on with his confirmation on time."

Tillis had vowed to withhold his vote for Warsh, whom he supports, before the Senate Banking Committee until the DOJ dropped its investigation of Powell. The Justice Department was investigating Powell over alleged cost overruns related to renovations at the Federal Reserve building.

Tillis' vote is critical to Warsh's confirmation, as the Banking Committee is made up of 13 Republicans and 11 Democrats. One Republican defection would have deadlocked the panel and blocked Warsh from advancing.

U.S. Attorney Jeanine Pirro, the top federal prosecutor in the District of Columbia, announced Friday that her office was turning the investigation over to the Fed inspector general's office.

Tillis said he had spoken to DOJ officials after Pirro's announcement and had received assurances that "the only way an investigation would be open would be a criminal referral" from the IG.

"They have made it very clear that the current investigation is completely and fully ended," he said.

Acting Attorney General Todd Blanche also appeared on "Meet the Press." He was asked if the DOJ would consider reopening the investigation after Warsh was confirmed. Blanche said the investigation was in the hands of the inspector general.

"If he uncovers evidence of criminal conduct, there is no doubt that we will investigate," he said.

Pirro's office still plans to continue an appeal of a recent federal judge's decision quashing subpoenas issued to the Fed, Tillis said. Pirro has said the judge's decision interferes with her ability to lead grand-jury investigations in general.

Tillis said he had received assurances on that issue as well. "Any appeal of Judge Boasberg's ruling will be with respect to legal principles and not for the purpose of reissuing subpoenas," Tillis said in a social-media post Sunday.

Warsh is likely to move quickly to implement significant change at the Fed. He said in his confirmation hearing on Tuesday that he wants "regime change." He noted that he would change the way the central bank measures inflation and how it communicates, among other issues.

Warsh is expected to push quickly for rate cuts, though he would need to convince his fellow members of the Fed's rate-setting Federal Open Market Committee to join him. With energy prices rising sharply due to the war in Iran, many Fed members are likely to be skeptical.

Tillis' decision also has implications for Powell. He can remain a voting member of the Fed's board until January 2028, even after he steps down as chair. Powell said recently he plans to do so while the threat of prosecution hangs over him.

Powell will likely face questions about his plans at the Fed's next press conference, scheduled for Wednesday.