Bessent says Trump's comment about suing his Fed chief nominee was a joke

By Andrea Shalal

WASHINGTON, Feb 6 (Reuters) - U.S. Treasury Secretary Scott Bessent on Friday stressed that President Donald Trump was joking when he said over the weekend that he could sue Kevin Warsh, his nominee to lead the Federal Reserve, if he doesn't lower interest rates.

Bessent, who had been asked about the comment by Senator Elizabeth Warren, a Democrat, during a Senate Banking ?Committee hearing on Thursday, told CNBC that Trump's quip at a Washington dinner was clearly made in jest.

"I tried to explain to Senator Warren - Warren, ?who seems to have no sense of humor - that it was a joke," he said. "And the president also ?made a joke about her not having reservations, so we know what that's ?a reference to."

Bessent said the ?Republican president "has great respect for the Fed, for the Fed's independence."

Trump sparked a minor furor over the weekend when he joked during a ?gala dinner hosted by the exclusive Alfalfa Club that he ?would sue Warsh if he didn't lower rates should he be confirmed to replace Fed Chair Jerome Powell later this year.

The president later told a reporter aboard Air Force One ?that it was a joke.

Bessent on Thursday declined to ?commit that the ?Trump administration would not sue Warsh if he follows a monetary path opposed by the president, telling Warren: "That is up to the president."

CONTROVERSY OVER PROBE INTO POWELL

In the interview with CNBC, the ?Treasury chief dodged a question on whether the U.S. Justice Department investigation into Powell should continue. "That will be for Jeanine Pirro to decide," he said, a reference to the U.S. Attorney for the District of Columbia who is leading the case.

The Trump administration's decision to open a criminal investigation into Powell over the cost of a renovation of the Fed headquarters building in Washington has drawn widespread condemnation from former U.S. central bank ?chiefs and ?even key members of Trump's Republican Party.

Powell has called the move a "pretext" to gain presidential influence over the setting of interest rates.

Republican Senator Thom Tillis, a member of the Senate Banking Committee, ?has said he'll block any Fed confirmation hearings until that legal matter is resolved. Senate Democrats have made similar demands.

Earlier this week, Republican Senator Tim Scott, who chairs the Senate Banking Committee, said he did not believe Powell had broken the law.

Asked about Scott's remark, Bessent said, "And if you look closely at the bench from the senators, they said no crime was committed. But it's also not a great look, because they said that the chair was incompetent. So no crime, but ?probably guilty of incompetence."

Trump's comment about Warren appeared to echo years of taunting questions about whether the Massachusetts lawmaker, a former presidential candidate, indeed has Native American heritage. Warren released DNA test results in 2018 to push back on Trump's comments, with the results showing some ?evidence of a Native American ancestor.

(Reporting by Andrea Shalal and David Lawder; Editing by Franklin Paul and Paul Simao)