Warren Poised to Lead Senate Banking Committee, Adding a Guardrail for Fed Independence
Democrats' sweeping midterm victory strengthens the Federal Reserve against President Donald Trump's efforts to meddle with it, Reuters reported on November 4, with the Senate's control over appointments a major guardrail against Trump landing any more allies at the central bank.
The Senate Banking Committee's new chair will likely be Democratic Senator Elizabeth Warren of Massachusetts, a harsh critic of Fed Chairman Kevin Warsh, replacing Trump ally Tim Scott of South Carolina. Warsh was confirmed as chair in May in a polarized 54 to 45 vote, with only one Democratic senator supporting him. His term ends in 2030.
Democrats, having campaigned heavily on cost-of-living issues, have incentive to push Warsh on the central bank's inflation mandate, and the Senate panel will have broad room to investigate issues such as Warsh's opaque disposition of hundreds of millions of dollars in assets as he ascended to the Fed's top job, economists from Monetary Policy Analytics wrote. The election result "increased the odds his term will end with Democratic control of the Senate."
Reuters also cautioned that independence risks remain: Fed independence "has always depended in part on Congress, and institutional support from the Senate can affect how much room policymakers have to make decisions based on inflation and employment rather than political pressures."
Source: Reuters
Published by GSM · USA (original Chinese edition)
Photo: 图：美联储总部大楼（GSM 固定图库）。The Federal Reserve headquarters. (GSM asset library)
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