Morning Report

Thune’s remarks highlight brewing battle over Fed chair

by Jared Gans - 04/16/26 7:00 AM ET

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by Jared Gans - 04/16/26 7:00 AM ET

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In today’s issue:

- Federal Reserve faceoff

- FISA vote delayed

- Iran war powers votes

- Temperature rising on AI debate

A showdown over the leadership of the Federal Reserve is ramping up ahead of a confirmation hearing for President Trump’s nominee for chair set for next week.

Senate Majority Leader John Thune (R-S.D.) on Wednesday urged the administration to “wrap up” its investigation of Fed Chair Jerome Powell, saying “it’s in everyone’s best interest” for it to end.

The comments point to the impossible road for Kevin Warsh, a former Fed board member who Trump chose as his nominee for chair in January, as long as Sen. Thom Tillis (R-N.C.) maintains his hold on the nomination.

Tillis has vowed to hold up the confirmation process until the Department of Justice (DOJ) end its probe into the Fed and Powell related to his oversight of renovations at the Fed’s headquarters in Washington, D.C., and testimony he gave before Congress on the project.

A federal judge quashed subpoenas issued in March.

Thune’s remarks followed a surprise visit that prosecutors from the U.S. attorney’s office in Washington made to the Fed’s headquarters Tuesday. They were turned away, as they hadn’t requested permission to visit in advance and for safety protocols.

Tillis, who is not running for reelection this year with his term expiring, railed against the investigation again on Wednesday after the incident, calling it “bogus, ill-timed, ill-informed,” The Associated Press reported.

In an interview with NBC News, the senator doubled down on his hold, saying he would vote for Warsh “simultaneously with the conclusion of that statement [ending the investigation] coming out of the DOJ, and not a day before, and not for the remaining … 264 days in my tenure in the U.S. Senate.”

“Now some people can say, ‘OK, Thom, you made your point. Jay Powell’s term expires as chair in May, so why not go ahead and fill it?’ Because I don’t want to reward bad behavior,” he added.

But Trump told Fox Business Network’s Maria Bartiromo the investigation needs to continue to determine if there was “incompetence, corruption or both.”

In the interview aired on Wednesday, the president also said he would fire Powell if he stayed on the Fed’s board after being replaced by Warsh as chair. Powell’s term as chair is set to come to an end in just less than one month, on May 15, but his separate term on the Fed’s board of governors runs until 2028.

If Warsh’s confirmation is held up, Powell has indicated he plans to continue to serve as chair past the end of his term in an acting capacity until the Senate confirms his successor, as permitted under federal law.

Warsh’s confirmation hearing before the Senate Banking Committee is scheduled for Tuesday.

National Economic Council Director Kevin Hassett said last week that Warsh’s nomination is “absolutely” on track.

Powell himself spoke out after receiving the subpoena in a rare public statement, alleging the investigation was designed to put pressure on him to be more aggressive in lowering interest rates.

Trump has openly called on the Fed to move more quickly in lowering rates to boost the economy, concentrating his ire on Powell.

He has previously floated firing the current Fed chair but hasn’t followed through and largely backed off the idea, which would likely cause a major market reaction.

“I’ve held back firing him. I’ve wanted to fire him, but I hate to be controversial,” Trump told Bartiromo this week.

Markets have been less sensitive to the president’s ongoing attempt to fire another Fed board member, Lisa Cook, over accusations of mortgage fraud, making him the first sitting president to attempt to do so in the agency’s history. The Federal Reserve Act only allows the president to terminate board members “for cause,” but the law doesn’t spell out what conduct is included.

A majority of the Supreme Court appeared hesitant to approve Trump’s assertion that he could fire Cook when they heard the case in January. A ruling is pending.

The court has also appeared open to allowing the president to fire heads of other agencies such as the Federal Trade Commission, but it has signaled it views the Fed in a special category of independence, granting Powell and future presidents greater protections from president actions.

▪ The Hill: Warsh discloses $130 million in assets

▪ CBS News: Why Powell, not Trump, will decide when he exits

Smart Take with Blake