Senate Banking Committee grills Kevin Worsh on ethics, divestiture and Fed independence

Kevin Worsh, the president's nominee to chair the Federal Reserve, told the Senate Banking Committee on April 21 that he has signed an ethics agreement with career officials and "agreed to divest all of those assets," while repeatedly insisting he would run the Fed independently if confirmed.

Worsh made the remarks during a contentious confirmation hearing dominated by ethics questions and worries about presidential influence over monetary policy. Ranking Member Senator Warren opened the hearing by saying the White House has "repeatedly and illegally attempted to take over the Fed," and accused the administration of seeking a loyalist who would bend policy to political ends.

The hearing underscored two parallel strands of concern: Democrats focused on Worsh's private financial ties and whether his firm or funds hold assets that pose conflicts, and many senators across the aisle emphasized his record and plans to shrink the Fed's balance sheet, prioritize interest-rate policy over large-scale asset purchases, and reform Fed communications.

Worsh told the committee he worked with ethics officials at the Federal Reserve and the Office of Government Ethics and agreed to a divestiture schedule. "Those assets that you represent at Juggernaut will be sold," he said in response to questions about the timing and form of divestiture, and later confirmed that the "large majority of those assets will be divested before I am sworn into office if confirmed." He said proceeds would be placed in "plain vanilla" permitted assets such as cash or Treasury bills to avoid any appearance of influence.

Democrats repeatedly pressed Worsh on whether President Trump asked him to commit to cutting interest rates; Worsh denied any explicit commitment. Senator Warren asked, "Did Donald Trump lose the 2020 election?" during an exchange aimed at testing independence and willingness to stand up to political pressure; Worsh replied the body certified the election and declined to be drawn into partisan debate. On the question of whether the president pressed the nominee to pledge rate cuts, Worsh said: "The president never asked me to commit to interest rate cuts at any particular meeting...nor would I ever do so."

Worsh also faced questions about his tenure as a Fed governor in the run-up to the 2008 financial crisis. Senator Warren said Worsh "dismissed repeated and increasingly urgent concerns from housing advocates" and worked closely with Wall Street when bailouts were arranged. Worsh disputed the characterization and said he had warned about risks in housing finance and supported reforms.

Several Republican senators emphasized Worsh's record and argued that the Fed must "stay in its lane" and reduce activities they view as politically charged, such as climate-related initiatives and expansive use of the balance sheet. Senator Lumis and others pressed him on how quickly the balance sheet could or should be reduced; Worsh said any regime change must be "deliberate, well-orchestrated, well-choreographed and well-described" to avoid market disruption.

On the broader policy front, Worsh told senators he favors using interest rates as the primary monetary tool, argued for improved data to measure underlying inflation (highlighting trimmed-average measures), and said the Fed must consider how rapid advances in artificial intelligence could change productivity and the employment outlook.

The committee left open further written questions and requests for documents. The hearing concluded with Chair and members reminding the nominee of follow-up deadlines for written answers. If confirmed, Worsh will enter an institution still grappling with public confidence, a large balance sheet and questions about the proper bounds of Fed responsibilities.