Democrats Win Senate, Leaving Trump No Easy Path to Add Allies to the Fed Board

Democrats took control of the Senate in Tuesday's midterm elections. That hands them the power to confirm or block anyone Donald Trump nominates to the Federal Reserve Board of Governors.

The Senate Banking Committee, which oversees the Fed, is expected to be chaired by Sen. Elizabeth Warren of Massachusetts. She would replace Sen. Tim Scott of South Carolina, a Trump ally and supporter of Fed Chair Kevin Warsh.

Warren has been a harsh critic of Warsh. She has also backed the Fed's independence on interest rate decisions.

The board has no open seats

There are no vacancies on the seven-member board today. Trump cannot nominate anyone until one opens.

The board's makeup, by term expiration: Jerome Powell (January 2028), Christopher Waller (2030), Michael Barr (2032), Michelle Bowman (2034), Philip Jefferson (2036), Lisa Cook (2038) and Warsh (2040). Three of the seven were appointed by Joe Biden.

Trump has called the board "hostile" and "partisan." He has argued the Fed needs to cut rates sharply.

Powell was appointed to consecutive chair terms by Trump and Biden and is now at odds with the president. His governor's term runs to January 2028. He has said he will stay on until an investigation into the Fed's headquarters renovation is fully over. A judge threw out subpoenas in that case and the Justice Department later dropped it.

The Cook fight is the immediate test

Trump first tried to fire Cook in August 2025 over allegations of mortgage fraud in 2021, before she joined the board. Cook denies it. No criminal charges have been filed.

The Supreme Court ruled this year that she can stay on the board while litigation continues. In a footnote, the court suggested Trump could try again if he gave her adequate notice and a chance to respond.

The White House set up a "committee of inquiry" last Friday, Oct. 30, to meet those conditions. A White House memo says the committee will recommend whether there is cause to fire her. By law, a president can remove a governor only "for cause."

Cook's lawyer Abbe Lowell wrote to Trump counsel William Scharf on Tuesday. He called the committee "demonstrably biased" and said the lawyers have "significant concerns regarding the objectivity and fitness of the committee for its assigned purpose."

Lowell said Cook cannot attend a Nov. 5 hearing because she will be at monetary policy meetings in Europe. He did not rule out an appearance later, but said the earliest would be after the Fed's Dec. 8-9 meeting.

If Trump announces he has cause, a court challenge is expected. Even if he won, a Democratic Senate would be unlikely to confirm his pick for her seat, according to Reuters.

Warsh gets a harder audience

Warsh took over as chair on May 22 after a 54-45 confirmation vote. Only one Democrat voted for him. Republican Sen. Thom Tillis had held up the confirmation until the Justice Department closed its probe of Powell.

Democrats also take over the House Financial Services Committee. Both panels can summon him. The Banking Committee will have wide room to ask about inflation, which Democrats campaigned on, and about how Warsh handled hundreds of millions of dollars in assets when he became chair. Warren is expected to press that last point.

Economists at Monetary Policy Analytics, the firm of former Fed Governor Larry Meyer, wrote that "hostile questioning could put Warsh's rhetoric to the test." Warsh favors a quieter, less publicly transparent style of central banking.

JPMorgan economist Michael Feroli noted that Warsh's term runs to 2030. He said the election "increased the odds his term will end with Democratic control of the Senate." To win another term, Feroli said, Warsh "will need to spend less time looking out the window and more time walking the halls of Congress."

How much does it change?

Mark Spindel, coauthor of a book on how the Fed became independent, told Bloomberg: "What the Fed gets from a Democratic Senate is a stronger bulwark."

Michael Strain of the American Enterprise Institute was more cautious. He called it "a marginal reduction in the threat to Fed independence, but it doesn't strike me as a sea change." The larger danger, he said, is "weaponizing the criminal justice system in order to affect monetary policy decisions."

The Powell probe is an example of that risk. It was closed only after a judge tossed the subpoenas and Tillis held up Warsh.

The election does not settle where rates go. The Fed raised its benchmark rate by a quarter point in September. It held at 3.75% to 4% last week, with Cook and Cleveland Fed President Beth Hammack dissenting in favor of another quarter-point increase. Trump wants lower rates. A Democratic Senate gives him no more leverage over that decision.

The next date is Nov. 5, when the White House committee is scheduled to hold its hearing. Cook's lawyers say she will not be there. The open question is whether the White House proceeds without her, or waits until after the Dec. 8-9 meeting.

If Trump declares cause, the case goes back to court. The Senate would then decide who, if anyone, fills the seat.