‘Up to Trump’: Treasury Secretary Scott Bessent Leaves Door Open to Suing Future Fed Chair, Rattling Wall Street

U.S. Treasury Secretary Scott Bessent told senators Thursday that any decision to sue Kevin Warsh—President Donald Trump’s nominee to chair the Federal Reserve—“is up to the president,” rebuffing repeated requests to guarantee the central-bank pick immunity from legal action if he resists aggressive rate cuts. The tense exchange with Sen. Elizabeth Warren unfolded during a Senate Banking Committee review of the Financial Stability Oversight Council’s annual report, where Democrats pressed Bessent on White House efforts to bring monetary policy under political control. Warren asked whether Warsh would face lawsuits or investigations should he fail to slash borrowing costs “exactly the way Donald Trump wants”; Bessent refused to rule it out, amplifying concern about Fed independence. Trump last week tapped the former Fed governor to replace Jerome Powell when the current chair’s term ends in May, publicly joking that he might sue Warsh if rates do not fall fast enough. The remark landed amid an unprecedented Justice Department probe of the Fed’s renovation spending that critics, including Powell, say is a pretext for political pressure. While Bessent acknowledged the Fed’s 2 percent inflation goal, he defended Trump’s push for lower rates and steeper tariffs as “pro-growth,” drawing fire from lawmakers who warned that sudden easing could rekindle price spikes. Republican Sen. Thom Tillis also questioned the wisdom of the ongoing criminal investigation into Powell, threatening to block Warsh’s confirmation until the matter is closed. Beyond monetary policy, Bessent faced scrutiny over Trump’s $10 billion lawsuit against the Internal Revenue Service for leaking his tax returns; the secretary conceded any payout would be funded by taxpayers but said he would “follow the law” on recusal decisions. Market watchers are bracing for a rocky confirmation path. Warsh, once a noted hawk, has recently embraced looser policy, but senators from both parties signaled they will demand assurances he can act independently. Analysts warn that even the threat of executive-branch lawsuits against a sitting Fed chair risks unsettling investors and weakening the dollar if traders suspect rate decisions are politically driven. With inflation still hovering above target and growth losing steam, the stakes could not be higher: a politicized Fed might deliver short-term stimulus, but at the cost of long-term credibility. As Bessent left the hearing, he declined to elaborate on whether the administration is crafting legal strategies tied to future monetary moves, telling reporters only that “the president will do what the president thinks is right for the American people.”