Bessent says Senate Banking Committee agreed to proceed with hearings for Fed nominee Warsh

WASHINGTON, Feb 13 (Reuters) – The Senate Banking Committee will proceed with confirmation hearings for Kevin Warsh, President Donald Trump’s pick to head the Federal Reserve, despite a key senator’s hold on the nomination, Treasury Secretary Scott Bessent said on Friday.

“I think it is important that we get to the hearings. Chair (Jerome) Powell’s term ends mid May, and anyone who cares about the integrity, the independence of the Fed is going to want to see continuity with Kevin Warsh,” Bessent told CNBC’s “Squawk Box” program.

Republican lawmaker Thom Tillis has said he supports Warsh’s candidacy, but will hold up a vote on any Fed nominee while the Justice Department continues to investigate Powell over a large Fed renovation project that is over budget.

Trump last month said he would nominate Warsh to head the U.S. central bank, but the White House has not yet sent the formal nomination to the Senate.

Asked about the delay, White House spokesman Kush Desai lauded Warsh’s academic credentials, private sector success, and prior experience on the Federal Reserve’s Board of Governors, adding, “The White House looks forward to working with the Senate to quickly confirm him and get the Federal Reserve back on track.”

Bessent said he had proposed during a meeting with Senate Republicans on Tuesday that the Senate Banking Committee carry out its own investigation of the Fed’s renovation of its Washington headquarters, but declined to comment on whether that probe could replace the Justice Department investigation and prompt Tillis to release his hold.

“We’ll see where the investigation goes,” Bessent said, referring to the probe headed by U.S. Attorney Jeanine Pirro. “There were subpoenas issued, but that doesn’t have to mean that there are charges. They reached out to the Fed in December via email, didn’t get responses and then issued subpoenas. So we’ll see what the state of that is.” Senate Banking Committee Chairman Tim Scott has said he does not believe Powell committed a crime. Scott’s office had no immediate comment on when a hearing could be scheduled.

Bessent noted that Scott had said he believed Powell was “guilty of one thing, incompetence and this building project is out of control, way over budget.”

Powell last month disclosed the criminal probe into his statements to the Senate about the Fed’s renovations, describing it as part of the Trump administration’s “threats and ongoing pressure” on the Fed to cut rates.

Tillis on Thursday told reporters that his hold on Fed nominees remains in place “until the investigation is brought to a conclusion.”

“That happens one of two ways: they cease the investigation, say there’s no there there, or they give me compelling information that says I was wrong,” Tillis said.

Bessent said he expected inflation to continue to decline, and said he expected it to be “near the Fed’s 2% target” by mid-2026 after sharp increases under former President Joe Biden.

(Reporting by Andrea Shalal and Susan Heavey; additional reporting by David Morgan; editing by Philippa Fletcher and Sharon Singleton)