COLUMN: When Trump Threatens to Sue His Own Fed Nominee

A Pretext to Intimidate the Fed

Since January 2026, Jerome Powell, the current Fed chair, has been the subject of a criminal investigation led by the Department of Justice. Officially, this investigation concerns cost overruns related to the renovation of the Fed’s headquarters in Washington. Powell testified before Congress on this matter, and it is this testimony that now serves as the basis for the investigation. But Powell himself has denounced this investigation as a “pretext” aimed at forcing the Fed to follow Trump’s orders regarding monetary policy. The Fed chair has been clear: this investigation has nothing to do with management issues; it has everything to do with his refusal to lower interest rates at the pace demanded by the White House.

Powell dared to say no. And for that, he’s being dragged through the courts. This manipulation of the judicial system is incredibly egregious. They’re taking a routine administrative case—budget overruns on construction projects—and turning it into a criminal case. Why? Because one man refused to bow to pressure. Because he defended the independence of his institution. And now, he’s paying the price for his integrity.

Tillis Refuses to Confirm Warsh

Republican Senator Thom Tillis of North Carolina announced that he would block any Fed nomination, including Warsh’s, until the investigation into Powell is “fully and transparently resolved.” Tillis serves on the Senate Banking Committee, which has 13 Republicans and 11 Democrats. The refusal of even a single Republican to vote for a presidential nominee would create a stalemate that would prevent the full Senate from recommending approval. “Protecting the Federal Reserve’s independence from political interference or legal intimidation is non-negotiable,” Tillis said on January 30, 2026.

Tillis is doing what too few dare to do: he’s saying “enough is enough.” In this climate of widespread submission, his gesture takes on a heroic dimension. He is putting his political career on the line to defend a principle: the Fed’s independence. That’s no small matter. It’s enormous, in fact. Because without that independence, the entire edifice of U.S. monetary credibility would collapse.

A Presidential Obsession

Ever since Powell’s initial appointment in 2018, Trump has relentlessly pressured the Fed to aggressively cut interest rates. Even after three consecutive cuts in 2025—which reduced the benchmark rate by three-quarters of a percentage point to a range of 3.50% to 3.75%—Trump continued his attacks. He wants rates even lower. He reiterated this in an NBC interview on February 4, 2026: there is “not much” doubt that Warsh shares his view that borrowing costs should be lower. Trump even specified that the willingness to cut rates was a “litmus test” for candidates for the Fed chairmanship.

Trump wants low rates. Period. It doesn’t matter that inflation remains above the 2% target. It doesn’t matter what the long-term consequences might be. He wants low rates because it looks good in the polls, because it creates the illusion of a thriving economy. But at what cost? At the cost of the Fed’s independence, at the cost of U.S. monetary credibility, and at the cost of global financial stability.

From Hawk to Dove

Kevin Warsh, 55, served as a Fed governor from 2006 to 2011, during the global financial crisis. At the time, he was known for his hawkish stance on monetary policy—a “hawk” in economic jargon. But since he began vying for the position of Fed chair, his rhetoric has changed dramatically. He has become an advocate for rate cuts, aligning his views with those of Trump. This dramatic turnaround has raised questions among many observers. In a July 2025 CNBC interview, Warsh even called for a “regime change” at the Fed, openly criticizing the current leadership and their “lack of credibility.”

This reversal deeply troubles me. Warsh used to be a hawk; now he’s a dove. Coincidence? I don’t believe in coincidences in politics. People change their minds when they want something. And Warsh wants that job. So he’s saying what Trump wants to hear. It’s human nature, perhaps. But it’s also deeply troubling. Because it means his convictions are negotiable—that his principles come at a price.

A pillar of global economic stability

The Federal Reserve’s independence is not an institutional whim. It is a fundamental principle established by law, based on the widely held belief that a monetary policy free from political interference is best suited to fulfilling the Fed’s dual mandate: low and stable inflation and maximum employment. The Fed cut rates three times in 2025, lowering its benchmark interest rate by three-quarters of a percentage point, with the aim of supporting a slowing labor market while hoping that inflation would continue to moderate. But inflation remains above the Fed’s 2% target, fueled in part by Trump’s substantial tariffs on imports.

The Fed’s independence is what makes the United States the United States. It is what makes the dollar the world’s reserve currency. It’s what makes investors around the world trust the U.S. economy. Destroying that independence is like sawing off the branch we’re sitting on. It’s sacrificing long-term stability for short-term political gains. And that is terrifying.

An Appointment That Fails to Reassure

Financial markets reacted cautiously to Warsh’s appointment. Stock futures were slightly down on the morning of January 30, 2026, though up from their lows since Warsh’s appointment became clear. David Bahnsen, chief investment officer at the Bahnsen Group, told CNBC that Warsh “has the respect and credibility of the financial markets,” but added that, in the short term, anyone taking this position would cut rates. Traders do not expect much action from the new chair: they anticipate at most two more rate cuts this year before the policy rate reaches around 3%, which policymakers have indicated is the long-term “neutral” rate.

Wall Street remains cautious. And that’s telling. The markets aren’t fooled. They can clearly see that this appointment is marred by conditions, threats, and interference. They can clearly see that the Fed’s independence is at stake. And when the markets have doubts, the entire economy suffers. Because once trust is lost, it’s extremely difficult to regain.

Stay or Go

Although Fed chairmen have historically resigned from their posts after being replaced as chair, that may not be the case this time. Powell still has two years left in his term as governor, and he may choose to serve it out as a bulwark against Trump’s efforts to undermine the Fed’s independence. The Supreme Court is already reviewing Trump’s decision to remove Governor Lisa Cook, a case that could ultimately determine the powers a president has over members of the Fed’s Board of Governors. This legal battle could redefine the limits of presidential power over the central bank.

Powell could stay. And I hope he does. Because his presence, even as a mere governor, would be a constant reminder of what institutional integrity means. It would be an act of quiet but powerful resistance. A refusal to give in to intimidation. And in this climate of widespread capitulation, we need these acts of courage.

When Institutions Give Way

Kevin Warsh’s nomination to head the Federal Reserve should have been a moment of institutional celebration. Instead, it has become a symbol of an authoritarian drift that threatens the very foundations of American democracy. Trump has turned the Fed into a political battleground, using the criminal investigation against Powell as a weapon of intimidation and brandishing the threat of legal action against his own nominee. By refusing to protect Warsh, Scott Bessent has shown that even the administration’s highest-ranking officials are willing to sacrifice institutional independence on the altar of presidential loyalty. Only a few elected officials, such as Thom Tillis, still dare to say no.

We are at a turning point. One of those moments when history shifts, when institutions that seemed unshakable reveal their fragility. The Fed, that bastion of monetary independence, is under siege. And the most terrifying thing is that the assault is coming from within, from the very pinnacle of power. I watch this scene unfold and wonder: how much longer before it all comes crashing down? How long before submission becomes the norm, before independence is nothing more than a memory? We’re playing with fire. And when you play with fire, you always end up getting burned. The question is no longer if, but when.

Signed, Jacques Provost