Treasury Secretary Scott Bessent says it would be “up to the president” to decide whether or not to sue Kevin Warsh, Donald Trump’s nominee to lead the Federal Reserve, if he fails to lower interest rates.
During remarks at a private black-tie dinner of the elite Alfalfa Club on Saturday night, Trump said he might sue his newly selected Fed chair nominee if he didn’t lower interest rates. Asked about it later that night by reporters, Trump said the remarks were made in jest. “It’s a roast,” Trump said. “It was all comedy.”
But Sen. Elizabeth Warren, D-Mass., the ranking member of the Senate Banking Committee, pressed Bessent on Trump’s remarks during a committee hearing on Wednesday, which come after the unprecedented attacks and legal investigation his administration has aimed at the current Fed chair, Jerome Powell.
Trump nominated Powell in 2017, but turned against him when he raised interest rates the following year.
Trump has repeatedly criticized Powell since returning to the White House last year and last month, Powell revealed that the Department of Justice had subpoenaed the Fed as part of an investigation into Powell’s Senate testimony last June about the Fed’s $2.5 billion building renovation.
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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Associated Press reporter Joey Cappelletti contributed to this report.
