Kevin Warsh is expected to be confirmed by the Senate this week as chair of the Federal Reserve, putting the former Fed governor on track to succeed Jerome Powell. The vote is expected to split along party lines, as Democrats criticize Warsh and he tells senators he will serve as an “independent actor.”
Warsh’s Fed Record
Warsh served on the Fed’s board as a governor from 2006 to 2011, and he built a reputation as an “inflation hawk” during the 2008 recession crisis. During that period, he advocated for higher interest rates to mitigate rising prices.
His record has shifted in the Trump era. Since Trump started his second term, Warsh has publicly aligned himself with the president’s view that interest rates are now too high. In a op-ed last November, he called the Fed’s leadership “broken” and described it as “an institution whose reach has extended far beyond its grasp.”
Trump, Powell And The Fed
The nomination comes as Trump continues his campaign to influence the US central bank. Democrats have criticized Warsh as Trump’s “sock puppet,” while Warsh told the Senate he will be an “independent actor” if he becomes chair.
Powell has also described the pressure on the institution in stark terms. In his last press conference as chair, he said Warsh testified that he will withstand political pressure from Trump and said he would “take him at his word.” Powell added: “The institution is being battered over these things. We’re having to resort to the courts to enforce our … ability to make monetary policy without political considerations” and said, “I’d like to think we can get out of that era and go back to respecting what the law says and what custom has been.”
Powell’s Exit
The fight has already reached beyond the nomination itself. Trump accused Powell of fraud over renovations at the Fed’s headquarters that went over budget, and the Justice Department ended its investigation after a Republican senator said he would hold up Warsh’s nomination.
Powell announced last month that he would stay on the Fed’s board as a governor until any inquiry into the renovations is “well and truly over with transparency and finality.” If the Senate approves Warsh this week, he would step into a central bank still under pressure from the White House and still dealing with the fallout from that dispute.
