STEVE INSKEEP, HOST:
The president's choice to lead the Federal Reserve says he would like the agency to do a little less.
MICHEL MARTIN, HOST:
Kevin Warsh testified before a Senate committee Tuesday. He said the Fed could do a better job of curbing inflation and unemployment if it was more narrowly focused. One big question is who decides what the Fed does? Warsh was nominated by a president who wants greater control over an independent agency.
INSKEEP: NPR's Scott Horsley remains independent and joins us now.
Scott, good morning.
SCOTT HORSLEY, BYLINE: Good morning, Steve.
INSKEEP: What was the hearing like?
HORSLEY: It was quite polarized. Committee Republicans mostly backed the nominee. Democrats were uniformly opposed. One question that came up again and again was whether Warsh would take marching orders from the president who's been demanding lower interest rates. Here's GOP Senator John Kennedy of Louisiana.
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JOHN KENNEDY: Are you going to be the president's human sock puppet?
KEVIN WARSH: Senator, absolutely not.
KENNEDY: Are you going to be anybody's human sock puppet?
WARSH: No. I'm honored the president nominated me for the position, and I'll be an independent actor if confirmed as chairman of the Federal Reserve.
HORSLEY: Warsh says it's not unusual that Trump wants lower interest rates. He says most presidents do. And Warsh says just because Trump is more outspoken than most other presidents, that's not a threat to the Fed's independence.
INSKEEP: Although we should mention Trump did more than speak. He's done a lot of things to try to get more control over the Fed. So are Democrats persuaded that this nominee would be independent?
HORSLEY: Well, that was exactly the point that Massachusetts Democrat Elizabeth Warren made. She says Trump hasn't just expressed an opinion. He's gone to great lengths to bend the central bank to his will.
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ELIZABETH WARREN: The president has repeatedly and illegally attempted to take over the Fed. His bogus attacks on Governor Lisa Cook and Chair Powell were designed to threaten all the members of the Fed.
HORSLEY: Now, so far, those efforts by the president have been blocked in the courts, but Trump's pressure campaign has raised alarms. The Fed is supposed to be insulated from that kind of pressure so that it can do what's best in the long run for the economy, not just what's good until the next election.
INSKEEP: Aside from his independence, this is a chance to find out what it is that Warsh would want to do with this agency. How, if at all, does he want to change it?
HORSLEY: Yeah. He thinks there is room for lower interest rates, but also a lower profile for the Fed. He suggests that policyholders at the central bank might hold fewer news conferences and give fewer speeches, and he wants to improve the data that they use to measure things like inflation, and he wants the Fed to scale back its investment in government debt.
INSKEEP: Well, since you said investment, what is Warsh saying about his own personal investments?
HORSLEY: Not a whole lot. He is worth more than $100 million, and that doesn't count his wife, who's heir to the Estee Lauder fortune, but Warsh's financial disclosure form is pretty opaque about how and where that money's invested. Senator Warren grilled Warsh about whether he has financial ties to the Trump family or to China, or even to Jeffrey Epstein.
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WARSH: Senator, I've worked tirelessly with the ethics officials at the Office of Government Ethics.
WARREN: Yes, and you have not revealed...
WARSH: I'm doing ethics agreement with them...
WARREN: ...A hundred million dollars in assets.
WARSH: ...And have agreed, Senator, to sell all of my...
WARREN: That's not my question.
WARSH: ...Financial assets.
HORSLEY: Warsh ducked that question with a promise to sell those undisclosed assets before he starts work at the Fed.
INSKEEP: How soon would he start work?
HORSLEY: Well, possibly as early as next month, but there's a big hurdle to clear first. Republican Thom Tillis insists he will not allow a vote on this nomination until the Justice Department drops that investigation of the Federal Reserve, which critics, including Tillis, say is just another way for the administration to put pressure on the Fed.
INSKEEP: NPR's Scott Horsley. Thanks so much.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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