Kevin Warsh just cleared his first Senate vote. The split was the most partisan a Fed chair pick has ever faced in the Banking panel.
Every GOP member voted yes. Every Democrat voted no. The vote came hours before what may be Powell's last rate call as Fed chair.
The 13-11 vote sends Trump's Fed pick to the full Senate. Sen. Elizabeth Warren, the panel's top Democrat, said it was the first vote of its kind in the panel's history.
"The Trump economy is in real trouble. Inflation is up, job creation is down. The stink of stagflation is in the air, and President Trump is getting desperate," Warren said before the vote.
The Fed chair pick has worked like a jury for years. Both sides had to sign off, even if only just. That tradition is now broken.
Why now: Every Fed chair pick before this one had at least some bipartisan support.
The vote almost went a different way. The DOJ had opened a probe into Powell tied to a multi-billion dollar renovation of the Fed's main building.
Sen. Thom Tillis is a GOP senator on the panel. He vowed to block Warsh unless the DOJ dropped the probe.
Trump backed the probe. He kept backing it even after a federal judge blocked grand jury subpoenas from U.S. Attorney Jeanine Pirro.
Pirro vowed to appeal as recently as last Wednesday. Two days later, she said the DOJ would drop the case.
Tillis flipped his vote to yes. Warren says the fight is not over because Pirro asked the Fed's watchdog to keep looking, which Warren says "leaves the door wide open" for the case to come back.
"I've got confidence that this investigation is over," Tillis said after the vote.
The standoff between Trump and Powell goes beyond a single rate move. Trump has spent months pushing Powell to cut rates harder.
The Fed has held its slow approach as the main point of friction. Powell said in a January note that the DOJ probe was tied to the rate fight.
He said the White House was going after him because of the Fed's calls on rates.
The Fed has stayed slow for two reasons. Inflation has not fully cooled, and the Iran war has pushed up energy prices in ways the Fed cannot fully predict.
The full Senate is set to vote the week of May 11. Warsh needs only a simple majority. The GOP holds 53 seats, so the math works without any Democratic help.
He may pick up help anyway. Sen. John Fetterman, a Pennsylvania Democrat, told Semafor he plans to vote yes.
Even if it is a GOP-only vote, it will still be the most partisan Fed chair vote in the modern era.
If Warsh gets the job, he could be sworn in before Powell's term ends on May 15.
For investors, the politics matter less than the next rate move. Powell has held the line on a wait-and-see approach.
He cites sticky inflation and Iran-war oil shocks. Warsh has signaled he is more open to faster cuts.
His first rate call as chair could come within weeks.
