COLUMN: The Federal Reserve Held Politically Hostage

Tillis Ready for a Fight

Thom Tillis said he was ready to fight the administration if necessary. “I grew up in a trailer park and I love a good fight,” he said. “If these people want to be unprofessional, I’ll meet them at their level. If they want to be professional and show some respect for the co-equal branches, we can resolve this fairly quickly.” The Republicans hold a 13-to-11 majority on the Banking Committee, which means that if all the Democrats and Tillis oppose Warsh, his nomination will not be able to move out of committee. Senate Majority Leader John Thune admitted Thursday that he did not believe the Senate could confirm a Fed nominee without Tillis’s support. Tillis made it clear that the Justice Department must fully complete its investigation before he will consider new nominations to the institution.

I admire Tillis for that. I really do. He’s taking a huge political risk by standing up to Trump this way, especially given how vindictive the president can be. But he’s standing his ground because he believes in something greater than partisan politics. He believes in the independence of the Federal Reserve. He believes that democratic institutions must be protected. That’s rare these days, especially among Republicans who tend to follow Trump blindly. Tillis has said he wants the amateurs out of the Oval Office. So do I. I’m sick of these people who think the government is their personal plaything. Tillis shows that there are still people with backbone in Washington.

The President’s Indifference

Donald Trump seemed unimpressed by the senator’s opposition during remarks made later Friday in the Oval Office. He even suggested that the nomination could wait until Tillis is no longer in office, which could be politically difficult given the uncertain outcome of the upcoming midterm elections that will determine the Republican lawmaker’s successor. “That kind of thinking is why he’s no longer a senator,” Trump told reporters. “If he doesn’t approve it, we’ll just have to wait until someone comes along who will.” Trump had initially stated that he knew nothing about the Justice Department’s investigation into Powell, saying only that he wasn’t very good at the Fed and wasn’t very good at building buildings.

This is absolutely unbelievable. Trump doesn’t even bother to feign respect for institutions. He’s basically saying: no problem, we’ll wait for Tillis to leave and find someone else to confirm our nominee. As if the confirmation of Fed nominees were nothing more than an insignificant administrative formality. He treats the Senate like a minor obstacle to be circumvented. And this insult to Tillis—this kind of thinking explains why he’s no longer a senator—is worthy of an authoritarian head of state who tolerates no opposition. Trump doesn’t understand or care that the Fed’s independence is one of the pillars of the U.S. economy. All he cares about is power and control.

GOP Figures Approve

Despite Tillis’s opposition, other Republicans are praising the choice of Warsh. Senate Banking Committee Chairman Tim Scott of South Carolina said in a statement that Warsh has a deep understanding of markets and monetary policy that will be essential in this role. He pledged to conduct a thoughtful and expeditious confirmation process that will carefully examine Warsh’s vision for refocusing the Federal Reserve on its core mission. “The Federal Reserve’s independence remains paramount, and I am confident that Kevin will work to build trust and credibility in the Fed’s monetary policy,” Scott said. House Financial Services Committee Chairman French Hill of Arkansas also welcomed the nomination.

Scott and Hill are saying all the right things about the Fed’s independence, but do they really understand what’s going on? Warsh is a candidate who has apparently passed Trump’s loyalty test, as Senator Elizabeth Warren put it. It’s no coincidence that Trump chose him. Scott talks about trust and credibility, but how can the Fed be credible when its chair is chosen because he’ll likely do what Trump wants? It’s contradictory. You can’t have an independent Fed and, at the same time, have a chair who was chosen for his willingness to follow political orders. Scott is trying to strike an impossible balance between supporting Trump and defending the Fed’s independence.

Warren Criticizes Takeover

Senator Elizabeth Warren of Massachusetts, a senior Democrat on the Senate Banking Committee, said that Warsh had apparently passed Trump’s loyalty test. This appointment is the latest step in Trump’s attempt to take control of the Fed and follows the Trump administration’s move to arm the Justice Department to launch criminal investigations against Fed Governor Lisa Cook and outgoing Chair Jerome Powell, she said. Warren asserted that Trump’s plan was to permanently oust Powell from the Fed’s board and install another puppet to complete his corrupt takeover of the U.S. central bank. This committee and the Senate should not move forward with any of Trump’s nominees for the Fed, including the Fed chair, she added.

Elizabeth Warren is right in principle. Trump is clearly trying to take control of the Fed so that it serves his political interests rather than the broader interests of the economy. But what exasperates me is the hypocrisy. Warren would never have reacted this way if a Democratic president had nominated someone with similar views on monetary policy. Both parties manipulate the Fed whenever they can. The difference here is that Trump is much more open and aggressive in his attempts to exert control. He doesn’t even try to hide his intentions. And that may be even more dangerous than the usual manipulation. When transparency becomes a weapon to erode democratic norms, we’re in very dark territory.

Uncertainty Looms

The criminal investigation into Powell, combined with news of ongoing unrest in Iran, has driven up precious metal prices. The price of gold, often considered a safer asset during times of uncertainty, rose 2.5% to $4,624.53 per ounce on Monday, a record high. Silver also hit a record high of $85.86 per ounce, up 7.3% for the day. However, despite Powell’s warning that the central bank’s independence is at risk, the reaction in U.S. markets was muted on Monday. The S&P 500, Dow Jones Industrial Average, and Nasdaq were all largely stable. April Larusse, head of investment specialists at Insight Investment, said it was certainly not the case that the Federal Reserve had done nothing about interest rates.

It’s fascinating to see how the markets are reacting to all of this. On the one hand, gold and silver are skyrocketing, which shows that some investors are genuinely worried. On the other hand, the stock markets remain stable, as if this crisis didn’t exist. It’s this dichotomy that troubles me. Investors seem to think that everything will work out in the end, that U.S. institutions are strong enough to survive these attacks. But is that really the case? Each attack weakens the foundations a little more. The current stability of the markets could be an illusion. And when reality finally catches up with fiction, it’s going to hurt. History teaches us that markets often underestimate political risks until it’s too late.

A Stormy Relationship

Trump appointed Powell as Fed chair in 2017 during his first presidential term. Until now, the long-standing feud between Trump and Powell has been largely one-sided, with the U.S. president calling the banker “Mr. Too Late” and an “idiot.” Powell’s statement on Sunday marks the first time he has publicly and forcefully pushed back against Trump, warning that the independence of the U.S. central bank is at stake. Trump has repeatedly threatened to fire Powell, whom he has criticized for not cutting interest rates as quickly as the president would have liked. In the second half of 2025, the Fed cut interest rates three times. The president has consistently blamed his predecessor, Joe Biden, and interest rates for U.S. inflation.

It’s sad to say, but Trump and Powell should never have been in this position. Powell was appointed by Trump himself, which makes this whole feud even more absurd. Trump chose someone he thought would be compliant, and when Powell refused to bow to his demands, Trump got angry. This is the behavior of an authoritarian business leader who doesn’t understand that certain institutions cannot be run like a family business. Powell is trying to defend the Fed’s independence, but he’s in an impossible position. If he cuts rates to appease Trump, he betrays his mission. If he resists, he becomes the subject of criminal investigations. It’s the kind of impossible choice that no one should ever have to make.

An Institution in Jeopardy

Powell stated that this case revolved around the question of whether the Fed would be able to continue setting interest rates based on evidence and economic conditions, or whether monetary policy would instead be driven by political pressure or intimidation. He said he had deep respect for the rule of law and accountability in our democracy, adding that no one—certainly not the chair of the Federal Reserve—is above the law. But this unprecedented action should be viewed in the broader context of the administration’s ongoing threats and pressure, he continued. Tillis stated that if there was any remaining doubt that advisers within the Trump administration are actively pushing to end the Federal Reserve’s independence, there should be none now.

That may be what concerns me the most. Powell raises a fundamental question: Can the Fed continue to function properly if it is subjected to this kind of pressure? The answer appears to be no. An independent central bank is essential for a healthy economy. Without it, interest rates become a political tool, used to win elections rather than to control inflation and maintain employment. That’s a recipe for economic disaster. And what’s truly frightening is that Trump seems to want exactly that. He either doesn’t understand or doesn’t care about the long-term economic consequences. All he cares about is short-term political gain. And we all risk paying the price.

The Test of Institutions

The battle over Kevin Warsh’s nomination and the investigation into Jerome Powell represent much more than just another political squabble in Washington. They are putting one of the most important institutions in the U.S. economy—and the principle of government agencies’ independence from political pressure—to the test. The Federal Reserve was created precisely to be independent of political influence, so that crucial economic decisions would be made based on data and analysis rather than political considerations. What is happening today threatens this carefully constructed balance and could have profound consequences for the U.S. economy and for confidence in democratic institutions.

I can’t help but think that we are witnessing a tipping point. What is happening with the Fed is not an isolated incident. It is part of a broader pattern of attacks on democratic institutions. Trump is testing the limits of what he can do, and so far, he hasn’t really been reined in. Tillis is putting up a fight, but will it be enough? I’m afraid not. The norms that have underpinned American democracy for centuries are being eroded, day after day, attack after attack. And the scariest part is that many people don’t seem to realize it. They see this as just business as usual in politics. But this isn’t business as usual. It’s something much more dangerous. And I fear that by the time everyone realizes the gravity of the situation, it will be too late to repair the damage.

Signed, Jacques Provost