Senate Democrats raise alarm over Kevin Warsh’s $100mn of ‘undisclosed’ assets

Unlock the White House Watch newsletter for free

Your guide to what Trump’s second term means for Washington, business and the world

Democratic senators are piling pressure on Federal Reserve chair nominee Kevin Warsh over more than $100mn of “undisclosed” financial assets, setting the stage for a fiery confirmation hearing next week.

Lawmakers on the Senate banking committee will grill Wars on April 21. But the former Fed governor turned financier is already facing tough questions from Democratic senators who are demanding answers about his financial entanglements and commitment to the independence of the world’s most important central bank.

Democratic senators’ concerns will further complicate confirmation hearings after a top Republican has insisted he will not back Warsh unless the Department of Justice drops a criminal probe into current Fed chair Jay Powell.

Elizabeth Warren, the top Democrat on the Senate banking committee, met Warsh behind closed doors on Capitol Hill on Thursday morning. Hours later, she told reporters she had “deep concerns” that if confirmed, Warsh would be President Donald Trump’s “sock puppet”.

Trump has repeatedly railed against Powell, calling him a “moron” for not lowering interest rates fast enough. The president earlier this week told Fox News he thought interest rates would be lower later this year, “when Kevin gets in”. He also this week said the DoJ would not drop the investigation into Powell, and renewed his threats to fire the Fed chair.

Warren also raised questions about Warsh’s financial assetsand accused the nominee of failing to comply with federal ethics rules.

Warsh, who was a Fed governor from 2006 to 2011 and then worked as a partner at Stanley Druckenmiller’s family office Duquesne, earlier this week disclosed assets worth more than $130mn.

His 69-page filing, published by the Office of Government Ethics, showed Warsh had more than $100mn invested in multiple funds run by Duquesne. Warsh did not disclose the underlying assets in one of the funds, Juggernaut, citing a confidentiality agreement.

Warren said: “There’s more than $100mn in assets to people or entities or outfits that are completely undisclosed and will remain undisclosed. That is not just a red flag. That is a red flag surrounded by fireworks and sparklers.”

“This is a real problem,” she added. “No one has gone forward within the Trump administration without disclosing fully their financial holdings and who they are financially entangled with.”

The OGE said Warsh’s disclosure report was in compliance with federal ethics rules, and that once Warsh divested some of his assets, he would have complied with rules for federal appointees.

But Warren on Thursday said a promise to divest assets did not satisfy her concerns.

She said: “He claims that he will divest those assets and therefore he doesn’t have to tell what they are. But I would point out, that means you can’t check to make sure that they are all gone. The whole point of the disclosures is not only to know about his entanglements in the past, but to be able to check to see that they are unwound by the time he becomes a Fed governor.”

A spokesperson for Warsh declined to comment.

Warren’s latest comments are not the first time she has criticised Trump’s pick to replace Powell at the top of the Fed. But they signal what is likely to be a contentious nomination hearing for Warsh when he faces the harsh glare of the public spotlight next week.

Warsh’s path to confirmation has been controversial amid a bipartisan backlash to Trump’s attacks on Powell.

Republican senator Thom Tillis has vowed to block Warsh’s nomination from advancing out of the banking committee until the DoJ drops its investigation into Powell over cost overruns for renovations at the Fed’s headquarters. Powell has said the investigation is a pretext to rein in the central bank’s independence.

Earlier on Thursday, all 11 Democratic members of the banking committee wrote a letter to the panel’s Republican chair, Tim Scott, calling on him to delay the confirmation hearing until the DoJ investigation into Powell and the Trump administration’s separate efforts to sack Fed governor Lisa Cook are dropped.

A spokesperson for Scott declined to comment.