Sen. Tim Scott Criticizes Fed Chair Powell's Plan to Stay After Term Ends

Federal Reserve Chair Jerome Powell has announced he will remain on the central bank's Board of Governors after his term as chair expires on May 15, even as President Donald Trump has nominated Kevin Warsh to succeed him. Senate Banking Committee Chairman Tim Scott, a Republican from South Carolina, described the move as a significant mistake during remarks at the Milken Institute Global Conference on Tuesday.

Scott argued that Powell's continued presence could lead to conflicting philosophies within the Fed, breaking with 75 years of tradition where former chairs step down. Powell's decision follows a year of tensions with the Trump administration, including clashes over interest rate policies and an investigation into cost overruns on the Fed's headquarters renovations.

The probe, initiated after Powell's testimony to Congress, focused on a $2.5 billion project that included elements like a beehive garden. U.S. Attorney Jeanine Pirro dropped the criminal investigation last month, referring it to the Fed's inspector general.

The Senate Banking Committee advanced Warsh's nomination last week, with a full Senate vote expected as soon as next week. Sen. Thom Tillis, a Republican from North Carolina, had initially withheld support for Warsh until the criminal probe into Powell ended.

Manhattan U.S. Scott, who questioned Powell about the renovations during a June 2025 Senate hearing, said he does not believe Powell committed a criminal act but emphasized the need for the inspector general to review the matter fully. In his Milken Institute comments, Scott suggested Powell might be staying to impede Warsh's agenda, which includes steering the Fed away from issues like environmental, social, and governance factors and reducing the agency's balance sheet.

“He's breaking 75 years of precedent. Every time you get a new chairman, the former chairman leaves. That's good news because what you don't want are these philosophies in conflict." — Sen. In a recent announcement, he said he would not leave until the investigation concludes with transparency and finality. A Fed spokesperson declined to comment on Scott's remarks but noted Powell has addressed the issue and would not act as a dissident on the board. Powell's tenure, spanning over eight years, included aggressive responses to the COVID-19 pandemic, such as expanding the Fed's balance sheet to $9 trillion and cutting interest rates to near zero. These measures helped the U.S. economy recover quickly, with unemployment falling from 8 percent in 2020 to between 3.5 and 4.3 percent since 2022. However, the Fed faced criticism for delaying rate hikes, allowing inflation to peak at 9.1 percent in June 2022 before tightening policy. Brian Wesbury, chief economist at First Trust Advisors, argued in a commentary that Fed policies under Powell have contributed to inequality by tripling the M2 money supply to $22.7 trillion over 18 years, benefiting asset owners while disadvantaging younger generations. Wesbury contended this has fueled political divides and a shift toward socialism among youth, citing the election of New York City Mayor Mamdani as an example.”

Powell would be only the third Fed chair in history to remain on the board after their chairmanship, according to reports. His clashes with Trump included the president's past suggestions of firing him and calls for lower interest rates. The administration's investigation into the headquarters project stemmed from Powell's testimony, which Scott described as dismissive.

The organization emphasized lessons for future chairs on balancing the Fed's dual mandate of price stability and maximum employment amid external pressures. Scott expressed hope that Powell would reconsider, stating that leaving would serve the Fed's independence and the country's best interests.

He dismissed ideas like revoking Powell's parking privileges as means to force him out, instead advocating for transparency in the ongoing inspector general review.