U.S. Federal Reserve Chairman candidate Kevin Warsh testifies during a Senate Banking Committee hearing on his nomination on April 21, 2026, at the U.S. Capitol in Washington, DC.
Mandel Gunn | AFP | Getty Images
Federal Reserve Chairman candidate Kevin Warsh said in a written response released Tuesday to a question from Senate Democrats about the Fed’s authority to set swap lines that he believes the Fed’s statutory independence does not fully extend to international policy matters.
In those comments, Mr. Warsh also flatly denied any ties to the late sex offender Jeffrey Epstein and hinted that he would abide by a plan under current Chairman Jerome Powell that would leave resolution of federal criminal investigations against the Fed to the Fed’s inspector general.
Swap lines have become an urgent issue in Washington since the Wall Street Journal reported earlier this month that the United Arab Emirates had discussed opening a swap line amid talks about possible U.S. aid for the economic fallout related to the Iran war. Treasury Secretary Scott Bessent later said a number of countries in the Persian Gulf and Asia have requested swap lines.
Sen. Elizabeth Warren (D-Mass.) asked Warsh whether he thought the Fed could deny the Treasury’s request to extend swap lines to certain countries, or whether the Fed would need to consult with the Treasury when opening or closing swap lines.
Mr. Warsh answered these questions without specifying the swap line. As he has written elsewhere, “The Fed’s independence is at its peak in conducting monetary policy, or setting interest rates.”
he continued. “Fed officials are not entitled to the same special deference, especially in areas that affect international finance. The Fed will work with the Administration and Congress on these issues,” Warsh wrote.
Warsh declined to comment when asked to elaborate on his position. The Treasury Department and the Federal Reserve also declined to comment.
Swap lines can be used for various purposes. The Fed expanded policy during the 2007-2008 financial crisis to target several developed countries. These lines helped countries such as the UK ensure they had enough dollars during a liquidity crisis. Although these were implemented as emergency measures, they also came to be seen as a source of prestige because so few countries had them in place and thus gave them direct access to the Fed.
The Fed generally views swap lines as a way to ensure market functioning rather than a means to provide aid.
The U.S. Treasury can also introduce swap lines. Mr. Bessent granted Argentina access to Treasury swap lines last year when the peso was facing a currency collapse. However, the use of the facility represents an immediate crisis that countries such as the UAE do not currently face.
The Senate Banking Committee voted along party lines Wednesday to advance Warsh’s nomination to the full Senate for a vote. It is likely to gain support from the Senate before Powell’s term expires on May 15th.
Warsh appeared in person before the committee last week and followed up on written questions from senators. Senate Democrats released their responses to the questions Tuesday.
The response was delivered to the committee on April 23, two days after Warsh’s confirmation hearing, according to a person familiar with the response.
Senate Republicans, who control the committee’s majority, do not plan to release Warsh’s response in full, committee spokesman Jeff Naft said Wednesday. Individual Republicans could make Warsh’s responses public.
Mr. Warsh also denied for the first time any relationship with Mr. Epstein in a written response. Mr. Warsh’s name appears in Mr. Epstein’s file, on a list of potential visitors to Mr. Epstein’s December 2010 rally on St. Barths Island. Mr. Warren asked Mr. Warsh if he had attended the party or met Mr. Epstein or his girlfriend, Ghislaine Maxwell, who is in prison.
He said Warsh was on St. Barts but did not meet Epstein. “I don’t know these people. I’ve never been to any of their events, and I’m not aware of any events that these people have attended,” Warsh said.
Mr. Warsh’s answer also speaks to the recent controversy involving the Fed. U.S. Attorney Jeanine Pirro in Washington, D.C., announced Friday that the Federal Reserve is suspending its investigation into ongoing cost overruns in building renovations. Instead, he said he would allow the Fed’s inspector general, appointed by Mr. Powell, to conduct an investigation.
Warsh responded to a separate question about a separate investigation with a broad statement supporting the Fed’s inspector general. “Throughout my career, I have respected and supported the work of inspector generals, and I intend to continue to do so at the Federal Reserve Board, if confirmed.”
