President Trump has nominated Kevin Warsh to be the next Federal Reserve Chair. If confirmed by the Senate, Warsh would replace Jerome Powell in May. Major indexes fell slightly on the news, the dollar climbed, and long-term bond yields rose.
Warsh is considered a relatively safe pick. Canadian Prime Minister Mark Carney called him a “fantastic choice.”
Warsh is no stranger to the Fed. After working at Morgan Stanley in the M&A division for seven years, he served as a member of the Federal Reserve Board of Governors from 2006 to 2011.
He is best known for the role he played in the response to the financial crisis. In 2008, when the markets crashed, Warsh was considered the “liaison” with Wall Street, acting as a bridge between the Federal Reserve and the banks. According to most reports, he did that job quite well.
Ideologically, Warsh is considered hawkish, suggesting he favors higher interest rates to contain inflation. He has criticized the Fed for policies that he believes enable excessive deficit spending.
Politically and socially, Warsh is closely aligned with elite business circles and has been supportive of Trump’s economic agenda. His wife, Jane Lauder, is the Estée Lauder heiress, and her father, Ronald Lauder, is a billionaire who went to school with Donald Trump, backed his 2016 run for president, and is credited with putting the Greenland idea on Trump’s radar.
The markets are doing a collective exhale right now. The fear was that Trump was going to put some sycophant in, and the person was immediately going to cut interest rates to 1% and ignite a death spiral of inflation.
Trump posted on Truth Social that Warsh is straight from “‘central casting,’ and he will never let you down.”
I thought that quote was hilarious. It’s possible that he meant that he has the right resume, but I think it’s more likely he meant that the guy’s good looking and tall.