By Michael S. Derby
April 21 (Reuters) – Federal Reserve chief nominee Kevin Warsh came under fire from Democrats in the U.S. Senate on Tuesday over his plans to divest tens of millions of dollars in financial assets if confirmed to lead the U.S. central bank.
“So that there’s no question about my independence, no question about the clarity of my financial record, I agreed to divest virtually all of my financial assets, the large majority of which will be divested” before taking office, Warsh said during his confirmation hearing before the Senate Banking Committee.
Warsh added that he had gone “above and beyond” what was required on the asset divestment plan for no other reason than that “the Fed needs to re-establish its credibility.”
He was actively challenged by Democratic Senator Elizabeth Warren about what he plans to sell and how he plans to sell it, a line of questioning that follows the release of financial disclosure documents filed by Warsh that showed massive wealth in a variety of investments, much of which is incompatible with Fed rules that govern what officials can hold.
In response to questions about how these investments would be sold or who might buy them, the 56-year-old lawyer and financier also declined to say what many of his assets were.
Warsh, who served on the Fed’s Board of Governors from 2006 to 2011, said he has an agreement with the government to sell assets within 90 days of being sworn into office. He rejected the idea that he had not made his holdings fully public, saying “I’ve shared all information about assets that I control and that I can share,” which met the “satisfaction” of the U.S. Office of Government Ethics.
Warsh noted that selling his holdings comes with challenges. He said that when that process was completed, he would have “virtually no financial assets” and “we’ll be sitting in something like cash.”
Warren, however, questioned him about the divestment plan. “Do we have any way to verify that, in fact, these sales will occur if we have no idea what’s in them?” she asked.
Senator Thom Tillis, a Republican who has said Warsh will not get a confirmation vote until the Trump administration’s criminal probe of Fed Chair Jerome Powell and a central bank renovation project are ended, defended Warsh after another Democratic senator said it appeared the Fed chief nominee would be out of compliance with central bank ethics rules.
“I thought it felt like a cheap shot to say, he’s out of compliance when in fact he’s not,” Tillis said.
Tillis, however, repeated that Warsh’s confirmation would be delayed as long as the probe of Powell was ongoing.
(Reporting by Michael S. Derby; Editing by Paul Simao)
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