Trump Picks Kevin Warsh To Lead Federal Reserve

President Donald Trump nominated Kevin Warsh, a 55-year-old former member of the Federal Reserve Board, to be the next chairman of the central bank. 

Warsh joined the Fed Board in 2006 as its youngest-ever governor and helped steer monetary policy from the Fed during the Great Recession before his term ended in 2011. He has been a vocal critic of the central bank’s post-pandemic strategy and has called for structural reform to the country’s financial system. 

“Warsh brings something markets crave right now — credibility rooted in experience. He was in the room during the financial crisis, and that kind of policy scar tissue matters,” financial analyst and writer Dean Lyulkin said in an email. “Yes, he’s a Wall Street insider with serious pedigree. But strong capital markets, functioning credit, and economic stability benefit far more than just finance.”

Warsh is a senior fellow at Stanford University’s Hoover Institution and works with billionaire investor Stanley Druckenmiller. If confirmed by the Senate, he will take over the top spot at the Fed from Jerome Powell in May.

Trump listed off Warsh’s bona fides in a detailed post to his social media platform, Truth Social, announcing the choice. Trump highlighted Warsh’s public sector work as well as a previous stint in the M&A department at Morgan Stanley.  

“I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best. On top of everything else, he is ‘central casting,’ and he will never let you down,” the president said. 

Warsh previously worked as an aide for President George W. Bush, who appointed Warsh to his first term. During the Great Recession, Warsh opposed the Fed’s quantitative easing program, under which the central bank purchased huge numbers of bonds to inject liquidity into markets, but he was also a key player in brokering the sale of Bear Stearns to JPMorgan Chase and arranging the bailout for American International Group, or AIG, The New York Times reports.

He was known as an inflation hawk during that period, advocating for higher rates to ward off inflation pressures. Since leaving the central bank, Warsh has said lower interest rates combined with a smaller Fed balance sheet would eat into the bank’s ability to affect the longer side of the yield curve while giving it more impact on short-term interest rates, according to the NYT.

“While Kevin Warsh’s recent comments on rate cuts may align with President Trump’s near-term preferences, his track record points to a more hawkish policy bias,” Michael McGowan, the head of investment strategy at wealth management firm Pathstone, said in an email. “Historically, Warsh has favored a smaller, less accommodative Federal Reserve and has been a proponent of a ‘scarce reserves’ framework.”

Warsh has argued that the 1951 agreement establishing the Fed’s independence should be reformed to allow for closer coordination between the central bank and the Treasury Department to manage the federal deficit. 

He is also married to Jane Lauder, part of the billionaire family behind cosmetics brand Estée Lauder and the daughter of Ronald Lauder, a wealthy businessman who has encouraged Trump to push for the acquisition of Greenland, where Lauder has business interests, according to The Guardian. 

The nomination comes the same week Fed officials voted to hold the benchmark rate flat despite calls from Trump and other high-profile Republicans to cut rates.

The central bank’s independence from the federal government is also being tested with federal investigations underway against Powell and Fed Governor Lisa Cook. After the disclosure of the investigation into Powell in January, the Fed chairman made an unprecedented video statement posted to the Fed’s website, in which he said the institution’s independence was being tested by political pressure.  

Trump and his allies have been calling for the central bank to cut its benchmark rate from the moment he ascended to the White House for a second term, with the president bestowing Powell the nickname “Too Late” in his social media posts lambasting the chairman.

“Jerome ‘Too Late’ Powell again refused to cut interest rates, even though he has absolutely no reason to keep them so high,” Trump said in a post Thursday, a day after the central bank voted to keep rates flat. “We should have a substantially lower rate now that even this moron admits inflation is no longer a problem or threat.”

UPDATE, JAN. 30, 2:13 P.M. ET: This story has been updated to include commentary from Pathstone's Michael McGowan and financial analyst Dean Lyulkin.