WASHINGTON D.C. — Kevin Warsh, President Donald Trump's pick to lead the Federal Reserve, defended his independence before the Senate Banking Committee as Democrats voiced concern that the central bank's autonomy would be threatened under his leadership. Warsh, who served on the Fed's Board of Governors from 2006 to 2011, called for a new approach to controlling inflation and an overhaul of the central bank's communications.

"I do not believe the operational independence of monetary policy is particularly threatened when elected officials — presidents, senators, or members of the House — state their views on interest rates," he said. He added: "Monetary policy independence is essential. Monetary policymakers must act in the nation's interest . . . their decisions the product of analytic rigour, meaningful deliberation, and unclouded decision-making."

Warsh blamed the Fed for an inflation surge after it slashed interest rates to nearly zero following the COVID-19 pandemic, a move he said continues to hurt U.S. households. He said he would move quickly to use new data tools to gain better insight on inflation and would discourage policymakers from commenting on potential movements of interest rates.

Senator Elizabeth Warren questioned Warsh's independence, alleging he would be a "sock puppet" for Trump. In December, Trump said he would not appoint anyone to lead the Federal Reserve unless they agreed with him, and he has said he would be "disappointed" if the central bank did not lower interest rates.

He has advocated shrinking the Fed's $6.7 trillion balance sheet and said any such plans would take time and must be publicly discussed well in advance. Warsh also praised the administration's push for increased bank deregulation.

Warsh's private investments exceed $100 million, including two holdings in the Juggernaut Fund LP as part of his work advising for the Duquesne Family Office of Stanley Druckenmiller. His nearly 70-page financial disclosure showed other holdings in SpaceX and Polymarket. "I agreed to divest virtually all of my financial assets, the large majority of which will be divested," he said, adding that he would be left in cash after completing the divestments. Warren asked, "Do we have any way to verify that, in fact, these sales will occur if we have no idea what's in them?"

Warsh needs 13 votes to clear the 24-member Senate Banking Committee, which has 13 Republicans and 11 Democrats. Senator Thom Tillis said he would vote against the nomination and join Democrats, creating a 12–12 split. Tillis said he would not vote for any Trump nominee until the investigation into current Fed Governor Jerome Powell is concluded or called off. Federal prosecutors said last month they found no evidence of wrongdoing in their investigation into Powell. Jeanine Pirro, the U.S. Attorney for the District of Columbia, has not indicated that the investigation will be dropped.