Federal Reserve chair nominee Kevin Warsh believes the Fed’s statutory independence doesn’t fully extend to international policy issues, he said in in written responses published Tuesday to Senate Democrats’ questions about the Fed’s authority to establish swap lines.
Warsh in those comments also flatly denies having any connection to deceased sex offender Jeffrey Epstein and hints he will abide by a plan to rely on the Fed’s inspector general to resolve a federal criminal investigation into the Fed under its current chair Jerome Powell.
Swap lines have become an urgent question in Washington after the Wall Street Journal reported earlier this month that the United Arab Emirates had discussed opening one during conversations about potential U.S. assistance for any Iran war-related economic fallout. Treasury Secretary Scott Bessent later said many countries in the Persian Gulf and Asia have requested swap lines.
Sen. Elizabeth Warren, D-Mass., asked Warsh whether he believed the Fed could refuse a request from Treasury to extend a swap line to a given country or if the Fed needed to consult with Treasury when opening or closing them.
Warsh responded to those questions without explicitly mentioning swap lines. He wrote, as he has elsewhere, that “Fed independence is at its peak in the operational conduct of monetary policy,” in other words, the setting of interest rates.
