Washington — President Donald Trump announced on Friday that he is nominating former Federal Reserve governor Kevin Warsh to become the 17th chair of the Federal Reserve following Jerome Powell’s term expiration in May, reporys Baltimore Chronicle via CNN. Trump described Warsh as someone he has known for many years and praised him as “central casting” and a potential “great” Fed chairman.
Warsh, 55, brings a history of Federal Reserve experience, having been appointed as the youngest Fed governor at age 35 in 2006. Previously considered for Treasury secretary and the Fed chair during Trump’s first term, Warsh has recently shifted his stance on monetary policy. Once an inflation hawk, he now supports lower interest rates and has suggested overhauling the Fed’s workforce. Economists, including Samuel Tombs of Pantheon Macroeconomics, note that Warsh may focus more on his legacy than pandering to presidential expectations.
Trump’s nomination occurs amid heightened tensions over the Fed’s independence. The president has repeatedly criticized Powell for not cutting rates, and earlier this month, Powell disclosed that the Trump administration opened a criminal investigation into him and the Fed, calling it a pretext to pressure the central bank. While Trump has expressed dissatisfaction with Powell and even waved a termination letter before House Republicans in August, his authority to remove a sitting Fed chair remains uncertain. Meanwhile, the administration is also pursuing legal action to remove Fed Governor Lisa Cook, challenging the central bank’s independence in a Supreme Court case.
The selection process for Warsh involved an extensive search that considered about a dozen candidates, including National Economic Council Director Kevin Hassett, former Treasury Secretary Janet Yellen, Fed Governor Christopher Waller, and BlackRock executive Rick Rieder. Trump emphasized that Warsh’s appointment reflects exceptional talent among the candidates and praised Hassett’s work at the White House while choosing not to replace him.
Warsh’s background includes service as a White House economist under President George W. Bush and his current role as a visiting fellow at the Hoover Institution, a conservative think tank at Stanford University. His track record, however, includes caution against aggressive monetary stimulus. During the 2009 Great Recession, he expressed concern over inflation even as unemployment surged. His resignation from the Fed in 2011 reflected disagreements over loose monetary policy, and analysts note that his current dovish stance may align with political convenience.
Within financial circles, Warsh is recognized for his experience managing crises, including the 2007-2008 financial meltdown alongside then-Fed Chair Ben Bernanke and New York Fed President Timothy Geithner. Nevertheless, he has demonstrated independence in the past, criticizing quantitative easing as potentially inflationary and beyond the Fed’s core mandate. Economists such as Joe Brusuelas have argued that Warsh misjudged the Great Financial Crisis by prioritizing inflation risks over the deflationary pressures unleashed by banking sector collapses and frozen credit markets.
The Senate Banking Committee will conduct a public hearing on Warsh’s nomination, followed by a vote in the full Senate. Some Republican senators have expressed concern that ongoing investigations into Powell and Cook could delay confirmation. Democratic lawmakers, including Sen. Elizabeth Warren, have criticized the politicization of the Fed and warned against advancing the nomination until the inquiries are resolved.
Warsh may face questions regarding his interest rate positions, potential promises to Trump, and connections to influential figures, including his father-in-law, Republican donor Ronald Lauder. Married to cosmetics heiress Jane Lauder in 2002, Warsh has longstanding ties to both political and business circles, reinforcing his profile as a high-profile and seasoned policy figure.
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