Treasury Secretary Scott Bessent hasn't ruled out a criminal investigation of Kevin Warsh, President Donald Trump's nominee for Federal Reserve chair, if Warsh refuses to cut interest rates. During a Senate Banking Committee hearing on February 5th, Senator Elizabeth Warren probed Bessent about a joke Trump made regarding suing Warsh if he doesn't adhere to the president's wishes on rate adjustments, according to CNBC Business.

Bessent's response left the door open for potential action, stating, "That is up to the president." This remark came during a tense exchange where Warren pressed for assurances that Warsh would not face legal repercussions for not aligning with Trump's rate preferences. The questioning highlighted a significant concern: the independence of the Federal Reserve, traditionally respected by U.S. presidents.

MORE FROM COINTIMES

Bitwise's Acquisition of Chorus One Signals Growth in Staked ETFs

Bitwise's acquisition of Chorus One enhances its staking product offerings, reflecting growing institutional interest in yield-generating crypto investments.

Bessent's testimony followed a contentious day in front of the House Financial Services Committee, where he faced scrutiny from Democrats over tariffs, inflation, and crypto regulations, further emphasizing the pressures surrounding the Fed’s autonomy. In recent months, Trump has publicly criticized current Fed Chair Jerome Powell for his reluctance to lower rates. This scrutiny intensified following the revelation of a Department of Justice investigation into Powell's handling of cost overruns related to the renovation of the Federal Reserve headquarters, a matter Trump opponents argue is an attempt to undermine the Fed's independence.

Amidst this turmoil, committee members like Tim Scott and Thom Tillis have voiced skepticism about the legitimacy of the investigation into Powell. Warren and her colleagues have urged Scott to stall Warsh's nomination until investigations into Powell and Federal Reserve Board Governor Lisa Cook are concluded. Warren accused Trump of trying to exert control over the Fed, stating, "He's threatened to fire Jerome Powell... and now he wants to appoint his man who's going to do exactly what he says at the Fed." This ongoing conflict raises critical questions about the future independence of the Federal Reserve and the implications for U.S. monetary policy going forward.