Why Wall Street is growing optimistic about Kevin Warsh's Fed chair nomination

• Sen. Tillis (R-NC) proposed ending the DOJ probe into whether Powell misled Congress about the $2.5 billion cost of Fed headquarters renovations, instead having the Senate Banking Committee lead any investigation
• Trump may accept the deal if Powell leaves completely after his term ends, rather than staying as a Fed governor until January 2028 as he is entitled to do
• Without a resolution, Tillis will continue blocking Warsh's nomination in committee, potentially allowing Powell to remain as chairman indefinitely in a 'pro tem' capacity beyond May 15

Summary

Wall Street executives are increasingly optimistic that the standoff over Kevin Warsh's Federal Reserve chair nomination will be resolved before Jerome Powell's term expires May 15. The breakthrough centers on a compromise proposed by Sen. Thom Tillis (R-NC), a ranking member of the Senate Banking Committee.

Key Development:

Tillis offered President Trump an "off-ramp" to end a DOJ investigation into whether Powell misled Congress about the Fed's new headquarters renovation costs, which reportedly exceed $2.5 billion (Trump cited "close to $4 billion"). Under the proposal, the Senate Banking Committee would lead the investigation instead of the DOJ and refer any wrongdoing findings to Justice.

Political Dynamics:

The compromise has backing from Senate Banking Chair Tim Scott (R-SC). Sources indicate Trump might accept the deal if Powell leaves the Fed entirely after his chairmanship ends, rather than remaining as a Fed governor until January 2028. Tillis characterized the DOJ probe as "bogus" and threatened to block Warsh's nomination unless it's dropped.

Market Context:

Wall Street executives have urged the White House to end the probe, fearing market volatility amid ongoing conflict with Iran and inflation concerns. Trump has repeatedly criticized Powell for not cutting interest rates faster, calling him a "disaster" and "stubborn moron."

Implications:

If no deal is reached, Powell could serve indefinitely as chairman in a "pro tem" capacity. The White House stated it remains "focused on working with the Senate to swiftly confirm Kevin Warsh," a former Fed governor and Stanford academic whom Tillis considers "eminently qualified."