If the Democrats can not hold the line of the Federal Reserve’s independence, then America as we know it is over. The U.S. dollar as the world’s reserve currency will be on life support and foreign countries will be expeditious in the pulling of the plug because trust in the U.S. financial system will be no more. – William A. Foster, IV
Jerome Powell leaves the Federal Reserve on May 15th. His likely successor, Kevin Warsh, is a wealthy former governor with convenient monetary views and a notable reluctance to say obvious things plainly. Democrats have the procedural votes to slow his confirmation. Whether they have the institutional will to use them is a different question and the answer matters more than most people realise.
The Federal Reserve does not often feature in discussions of HBCUs. It should. The interest rate at which a small Black-owned bank in Memphis can borrow money, the credit conditions facing a first-generation homeowner in Atlanta, the yield that a university endowment in Alabama can realistically expect on its bond portfolio: all of these are shaped, in ways direct and indirect, by the policy choices made inside the Eccles Building in Washington. The selection of a new Federal Reserve chair is, among other things, a decision about whose economy gets managed.
That is what makes the confirmation of Kevin Warsh, President Donald Trump’s nominee to succeed Jerome Powell, more consequential than the usual Washington pageant of hearings, hedged testimony, and partisan positioning. Warsh appeared before the Senate Banking Committee on April 21st. By the end of the day, a reasonably clear picture had emerged not just of his monetary philosophy, but of his character. It was not a flattering portrait.
Start with the money, because with Warsh the money is unavoidable. Financial disclosure forms filed ahead of the hearing placed his personal holdings at between $135 million and $226 million, concentrated heavily in two positions in the Juggernaut Fund LP, a vehicle associated with billionaire investor Stanley Druckenmiller, for whom Warsh has worked as a partner. His wife, Jane Lauder, granddaughter of cosmetics entrepreneur Estée Lauder, has an estimated personal fortune of around $1.9 billion. By comparison, Jerome Powell, the man Warsh would replace, disclosed assets of roughly $19.5 million, held mostly in index funds and municipal bonds. Ben Bernanke, who chaired the Fed during the 2008 financial crisis, stepped down in 2014 with assets of at most $2.3 million, mostly in retirement accounts. The message encoded in Warsh’s disclosure is not that rich people cannot run central banks. It is that the man who will make decisions about credit access for working Americans has never had occasion to worry about credit access himself.
The hearing did nothing to soften that impression. Warsh was asked, at one point, a question that should not require courage to answer: who won the 2020 presidential election? The answer is documented, certified by Congress, and not remotely in dispute among anyone operating in good faith. Warsh declined to say it plainly. He noted instead that “this body certified that election”—a formulation so carefully calibrated to avoid displeasing the president who nominated him that it managed to be both technically accurate and substantively evasive. Paul Krugman, the Nobel Prize-winning economist, called Warsh Trump’s “sock puppet.” Senator Elizabeth Warren used the same phrase. The comparison is uncharitable. It is also, on the evidence of the hearing, not easily rebutted.
Warsh was equally reluctant to defend Fed Governor Lisa Cook (Spelman), who faces politically motivated scrutiny from the administration, or to express support for Powell, who is the subject of a Justice Department investigation that Republican Senator Thom Tillis of North Carolina has used as a pretext to block Warsh’s own confirmation vote—a piece of procedural irony that illuminates just how thoroughly this nomination has been consumed by partisan mechanics. A nominee unable to defend his soon-to-be colleagues from transparently political attacks is, at minimum, a nominee who has chosen to demonstrate that loyalty to the president outranks loyalty to the institution he is asking to lead.
What might a Warsh-led Federal Reserve actually look like? The hearing offered some clues, and they are worth examining seriously rather than dismissing as political noise. The Council on Foreign Relations, reviewing his stated priorities, identified three broad themes: a return to the Fed’s core mandate of price stability and maximum employment, a stricter approach to inflation targeting, and a reduced reliance on quantitative easing and forward guidance. None of these is inherently unreasonable as a policy preference. The question is how they interact with the distributional realities of the American economy.
When the Federal Reserve tightens monetary conditions, raises interest rates, reduces the supply of credit, the effects are not equally distributed. Large corporations with investment-grade credit ratings refinance their debt through instruments that most individuals never encounter. Small businesses, particularly those operating in underserved communities with thinner banking relationships, find that credit simply disappears, or becomes prohibitively expensive. Families with secure equity in their homes can ride out a tightening cycle. Families trying to enter the housing market for the first time, often with smaller down payments and less financial buffer, are priced out. African American households, for reasons rooted in decades of discriminatory lending, exclusion from wartime wealth-building programmes, and constrained intergenerational asset transfer, are disproportionately represented in that second group. They enter recessions earlier, recover later, and bear more of the cost of monetary medicine administered for conditions they did not cause.
HBCUs sit at the intersection of several of these vulnerabilities. They operate with endowments that are, on average, a fraction of those at comparable predominantly white institutions partly because their alumni were, for generations, systematically excluded from the wealth accumulation that fuels philanthropic giving. They educate a student population that carries above-average debt loads into a labour market that does not always reward them proportionally. And despite the existence of a network of Black-owned banks and Minority Depository Institutions across the South and Midwest, only two HBCUs currently bank with Black-owned financial institutions. The rest rely on large money-center banks—the same institutions with documented histories of predatory lending to African American borrowers and communities. The irony is structural: HBCUs are among the most visible anchors of African American institutional life, yet their banking relationships run through the very sector that has most consistently extracted wealth from the communities they serve. The monetary environment matters to HBCUs not as a background condition but as an operational reality, and the institutions managing their accounts have rarely been the ones most attentive to their interests.
Into this context arrives a nominee who has, according to an analysis by Employ America, a nonpartisan inflation research group, demonstrated a pattern of supporting tight money when Democrats hold the White House and easy money when Republicans do. Warsh has also expressed the view that productivity gains from artificial intelligence could justify lower interest rates than would otherwise be warranted. That is a philosophically coherent position, though it happens to align precisely with what the current administration has made clear it wants: lower rates, delivered promptly. The convergence of Warsh’s stated views with the president’s stated preferences is, one might say, remarkable in its consistency.
All of which brings the discussion to the Senate, and to the question of what Democrats should do with the leverage they currently possess. The arithmetic is not complicated. Invoking cloture, the procedural step that ends debate and allows a confirmation vote, requires 60 votes. Republicans hold 53 seats. Democrats, including two independents who caucus with them, hold 47. That is more than enough to block confirmation indefinitely. Not to delay it. To block it. The mechanism differs from the Garland blockade when Republicans held the majority in 2016 and simply refused to schedule hearings; Democrats today are in the minority and must deny cloture but the constitutional leverage is equivalent and the outcome is identical. No confirmation without Democratic cooperation. The real obstacle is not parliamentary. It is political. Democrats have a long and costly institutional history of treating procedural restraint as a virtue even when their opponents have long since abandoned the same courtesy, and of discovering, too late, that the other side was keeping score.
Republicans offered the definitive tutorial in this kind of institutional resolve in 2016, when the Senate majority, led by Mitch McConnell, refused to consider President Obama’s nomination of Merrick Garland to the Supreme Court for nearly a year, on the stated grounds that a new president should make the selection. The stated grounds were pretextual. The real grounds were power. The manoeuvre was widely criticised as a breach of constitutional norms. It was also completely effective. The Supreme Court was reshaped for a generation. The lesson drawn by McConnell’s critics that norms of procedural deference were worth preserving regardless of how the other side behaved has not aged especially well. The lesson drawn by McConnell himself, that institutional power belongs to those willing to use it without apology, has proved considerably more durable. Democrats are not in the majority. They do not need to be. They need only hold together, deny cloture, and decline to confirm a nominee who has already failed the most basic test of the job. If Merrick Garland could be refused a hearing on thinner grounds, Kevin Warsh can be refused a confirmation vote on these.
Democrats who delay Warsh’s confirmation need not invent a pretext. The grounds are substantive and readily defensible. The nominee’s financial disclosures are among the most complex ever submitted for this position, listing roughly 1,800 individual assets, many classified under confidentiality agreements that prevent him from identifying the underlying holdings. He has pledged to divest within 90 days of confirmation, but the Senate is not obligated to extend that trust in advance. His confirmation hearing raised, rather than resolved, questions about his independence from the executive branch. A thorough vetting is not obstruction. It is the job.
The midterm elections in November 2026 add a further dimension that Democrats would be foolish to ignore. Monetary policy works with a lag. Rate decisions made in the spring are felt by households in the autumn. A newly confirmed Fed chair eager to demonstrate usefulness to the administration that appointed him would have both the motive and the means to generate a short-term economic improvement—lower mortgage rates, looser credit, a consumer spending bounce—timed to arrive just as voters are making up their minds about which party to support. That Democrats would have facilitated this outcome through premature confirmation is not an argument they would enjoy making to their constituents.
A sustained blockade, by contrast, forces a public conversation about what kind of institution the Federal Reserve should be. It creates an opportunity to put into the congressional record testimony from economists who study monetary policy’s distributional effects, from community bankers who work in markets the Federal Reserve’s balance sheet decisions directly affect, and from HBCU administrators who can explain, in terms that general audiences can understand, how interest rate policy shapes the financial landscape of institutions that serve some of the most economically vulnerable students in American higher education. The Fed’s decisions are made in public. Their consequences for working Americans—and especially for African American communities—are rarely discussed in the rooms where those decisions get made. A confirmation blockade is that conversation, conducted at a volume that cannot be ignored.
The Federal Reserve’s independence is not a natural condition. It is a political achievement, and like all political achievements, it requires active defence from those with the means to provide it. A nominee who cannot bring himself to say who won a presidential election—a question whose answer is written in congressional certification and judicial record—has already told the market, and the public, something important about how he understands that independence. The Senate does not have to accept that answer. Democrats have the votes to reject it. The question is whether they have the will to use them without flinching, without offering off-ramps to colleagues tempted by the false comfort of bipartisan procedural cooperation, and without eventually concluding that confirmation on unfavourable terms is preferable to the discomfort of sustained opposition. It is not. Warsh should not be confirmed. He should be blocked. The precedent for doing so was set by the people now asking Democrats to stand down.
For African American institutions, and for the HBCUs that represent their most durable infrastructure, the lesson is one they have had occasion to learn repeatedly: the rules of the game are made by those who show up and insist on making them. Monetary policy is not race-neutral, however much it presents itself as such. The cost of credit, the availability of capital, the conditions under which wealth can be built and transmitted across generations—these are not technical abstractions. They are the material of institutional survival. The question of who chairs the Federal Reserve is, among other things, a question about whose survival the institution is organised to protect. That question deserves a full and unhurried answer.
Disclaimer: This article was assisted by ClaudeAI.
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