What we covered
• Trump’s most consequential hire? Kevin Warsh testified Tuesday before the Senate Banking Committee in a high-stakes confirmation hearing as President Donald Trump’s nominee to lead the US central bank.
• New chair, new rules: Warsh vowed to introduce “regime change” at the Federal Reserve if confirmed, potentially reducing the number of policy meetings per year and suggesting a new framework for inflation.
• Political independence: Warsh faced multiple questions from senators about his ability to remain immune to pressure from Trump to cut rates immediately. Warsh defended his, and the institution’s, ability to operate outside of political interference.
• Existential threat: Republican Sen. Thom Tillis repeated his vow to block the confirmation vote until a “frivolous” Justice Department criminal investigation into Fed Chair Jerome Powell is overturned.
Our live coverage of Federal Reserve chair nominee Kevin Warsh has ended.
Stocks are slightly lower. Wall Street is watching Warsh, Iran and earnings
US stocks were lower after Kevin Warsh’s confirmation hearing concluded Tuesday.
The Dow was down 132 points, or 0.27%. The S&P 500 and Nasdaq each fell about 0.4%. The major indexes were lower for the second day in a row, pausing a rally that saw the S&P and Nasdaq hit record highs.
Warsh during the hearing rejected senators’ concerns that he would bend to President Donald Trump’s demands for lower interest rates. Warsh also discussed the Federal Reserve’s policy, suggesting a “new framework” for inflation but offering few details.
While traders might have listened to the hearing, focus is also on the impending US-Iran ceasefire deadline. Separately, Wall Street is in the midst of earnings season.
Stocks came off their highs earlier after Pakistani Information Minister Attaullah Tarar said that Iran had not confirmed whether it would attend negotiations.
“Nerves are a bit on edge around the Pakistan talks, but earnings are the main catalyst with most of the biggest companies reporting before the end of next week,” David Russell, global head of market strategy at TradeStation, said in an email.
Brent crude, the global oil benchmark, rose 3.3%, to $98.65 per barrel. WTI, the US benchmark, also rose 3.3%, to $90.29 per barrel.
Warsh refuses to defend Fed Gov. Lisa Cook, whom Trump has sought to fire
President Donald Trump’s Federal Reserve chair nominee, Kevin Warsh, refused to weigh in on a pending Supreme Court case over whether Trump can fire Fed Governor Lisa Cook for unproven allegations of mortgage fraud.
But the Federal Reserve Act of 1935 prevents the president from removing any member of the Fed’s Board other than “for cause,” which is generally interpreted to mean negligence or malfeasance in the role.
The pending Supreme Court case is about more than just Cook’s actions, or lack thereof. Central to the case is how far a president can go to exert their influence over the Fed.
In support of Cook, Fed Chair Jerome Powell attended oral arguments at the Supreme Court earlier this year, calling it “perhaps the most important legal case in the Fed’s 113-year history.”
Warsh, however, said it would be “inappropriate” for him to weigh in on the case, adding that he’s of the mindset that the Fed should “stay in its lane.”
The Fed under Warsh might not meet eight times a year any more
President Donald Trump’s nominee to lead the Federal Reserve expressed a willingness Tuesday to consider holding fewer monetary policy meetings, a break from a nearly 50-year practice.
Since the 1980s, the Fed has held eight meetings a year, occurring roughly every six weeks, to vote on the appropriate level of interest rates. By law, though, central bankers are only required to have four such meetings.
Warsh told senators on the banking committee that “four (meetings) is not enough, so having more meetings than that is appropriate.” At the same time, he didn’t commit to holding eight meetings a year.
He did, however, seem to agree to hold post-meeting press conferences. “If a press conference were held, I think it would be incumbent to hear what the reporters of the day had in mind,” Warsh said.
Why Tillis will remain a "no" on Warsh
If there’s any single message to take from Kevin Warsh’s confirmation hearing to become the next chair of the Federal Reserve, it’s that Sen. Thom Tillis is not going to budge on his vow to block the vote.
There is only one path for Warsh’s confirmation, and it runs through Tillis. That means Warsh, and the White House, have a problem.
The red line that the retiring North Carolina senator has drawn in the sand is not a secret: He’s a “no” on Trump’s pick to be the next Fed chair until the “frivolous” Justice Department investigation into current Fed Chair Jerome Powell is dropped entirely.
When that happens — and only when that happens — Tillis will be on board and Warsh will sail through his committee and Senate floor votes, given the GOP majority in the chamber.
But at least twice in the last week, President Donald Trump has signaled he has no plans to order an end to the probe. Jeanine Pirro, the DC US Attorney leading the probe, has also repeatedly doubled-down on her pursuit, despite a running series of mishaps and judicial slap-downs.
Over the course of the last week, White House officials have quietly discussed whether there’s a way to circumvent Tillis and his deciding vote on the committee — something that is technically procedurally possible, but would require votes they can’t secure or a rule change there’s no appetite to consider.
For now, there’s no path to confirm Warsh before Powell’s last day on May 15 until the investigation is explicitly, and publicly, dropped.
What does a Fed chair even do?
The head of the central bank is officially chair of the Board of Governors of the Federal Reserve System, charged with conducting the nation’s monetary policy “to support the goals of maximum employment and stable prices,” according to the central bank’s website, in addition to helping regulate banks.
But the position actually encompasses three specific roles:
- Chair of the Board of Governors: Oversees efforts across the entire system to facilitate payments, banking regulation, research and anything related to monetary policy. Gives semiannual testimony to Congress on the central bank’s policies and outlook.
- Chairman of the Federal Open Market Committee (FOMC): Presides over the committee that sets interest rates. Sets the agenda for policy meetings held every six weeks. Facilitates discussions around key indicators like inflation, the labor market, financial markets and global risks. Helps build consensus among committee members. Serves as the public face of the committee.
- Federal Reserve Governor: One of seven governors on the FOMC who vote on rate moves and oversee the Fed system.
Fed "not blameless" in expansion of K-shaped economy, Warsh says
Kevin Warsh, President Donald Trump’s nominee for Federal Reserve chair, said Tuesday during his confirmation hearing that the US central bank is “not blameless” in the exacerbation of wealth inequality, or what’s become known as the K-shaped economy.
Warsh said that the Federal Reserve’s sizable balance sheet, currently at $6.7 trillion, has “grown its imprimatur over the economy.”
“I think the Fed is not blameless for the divergence you described between those that have financial assets and those that don’t – had the balance sheet not been brought from the $800 billion level when I showed up at the Fed in 2006 to an order of magnitude higher,” Warsh said in a response to a question from Democratic Sen. Raphael Warnock of Georgia. “If the Fed had kept a smaller balance sheet … I think interest rates could be lower, inflation could be better and the economy could be stronger.”
The Fed’s balance sheet grew in 2008 in response to the “extraordinary measures” of the emerging financial crisis at the time, Warsh said.
“But we agreed to do that only in the times of emergencies, only when interest rates were pinned to zero,” Warsh said. “The big balance sheet has become an ordinary, recurring force that, I think, has been quite unhelpful.”
"Absolutely not": Warsh pushes back on claims he'd be Trump's "sock puppet"
Senators pressed Federal Reserve chair nominee Kevin Warsh on Tuesday as to whether he’d answer President Donald Trump’s call for lower interest rates.
“Are you going to be the president’s human sock puppet?” Republican Sen. John Kennedy asked Warsh.
“Senator, absolutely not,” Warsh responded.
Kennedy then asked him if he would be anyone’s “human sock puppet.” Warsh vowed to be “an independent actor, if confirmed” to the role atop the US central bank.
Trump has repeatedly said he would like the next chair to consult him on rate decisions, and continues to advocate for lower rates.
Warsh says he won't do Trump's bidding
Kevin Warsh said Tuesday he would not lower interest rates or make any other policy maneuvers as a direct result of political pressure from President Donald Trump.
Republican Sen. John Kennedy asked Warsh to confirm that Trump had never “sat you down, looked you in the eye and said, ‘Here’s the deal, Scooter, I’m going to appoint you, but you got to agree to lower interest rates.’ That didn’t happen, or did happen?”
Warsh replied: “The president never once asked me to commit to any particular interest rate decision, period, and nor would I ever agree to do so if he had, but he never did.”
“Like everyone else in the committee, in the world, I’ve heard his view on interest rates,” Warsh said about Trump’s desire for much lower interest rates. “It sounded very similar to me, to every other president in economic history that I’ve studied,” he added, noting that leaders generally have a strong preference for lower rates.
Tillis: "Let's get rid of this investigation so I can support your confirmation"
Republican Sen. Thom Tillis, who has vowed to block the confirmation of the next Federal Reserve chair, said Tuesday he fully supports Kevin Warsh in the role.
“If anybody thinks a president can appoint somebody and you unilaterally can control things, you’re going to be an unsuccessful chair, if history is any guide. And you’ve served under some of the best, so I know you’re going to do it right,” Tillis said.
But he said he won’t allow Warsh to advance in the confirmation process unless the Department of Justice ditches a criminal investigation into Fed Chair Jerome Powell tied to the central bank’s multibillion-dollar renovation of its headquarters.
In order for Warsh to advance to a full Senate confirmation hearing, he must earn a majority of the votes on the Senate Banking Committee, which is comprised of 13 Republicans and 11 Democrats. Without Tillis’ stamp of approval, the panel will be evenly split 12-12 and the nomination will fail.
“The problem that I have here is that we had some US attorney with a dream or Assistant US Attorney thinking it would be cute to bring Chair Powell under an investigation just a few months before the position was going to be open,” Tillis said of DC District Attorney Jeanine Pirro’s investigation.
“Let’s get rid of this investigation so I can support your confirmation.”
Warren: Trump is trying to "juice" the economy for political gain with Warsh nomination
Massachusetts Sen. Elizabeth Warren argued today that President Donald Trump is motivated to lower interest rates and juice the economy to benefit himself ahead of the midterm elections, despite historic precedent to keep the Federal Reserve free from political interference.
Warren said she also hopes people will ask Warsh about any ties to Jeffrey Epstein.
“Republicans want to rush this on through with no independent investigation. I think that is a terrible mistake,” she said.
Addressing Trump’s threats he’d fire Chair Jerome Powell after his term expires on May 15 if Warsh isn’t confirmed, Warren argued that the president “thinks his path to juicing the economy is control over the Fed and so he’s threatening to just undermine the Fed to keep creating as much chaos as he can unless he gets his way.”
Stocks erase gains, bond yields rise
US stocks were losing steam Tuesday morning while Kevin Warsh’s confirmation hearing continues.
The Dow edged lower, erasing gains after climbing as much as 400 points earlier. The S&P 500 and Nasdaq each fell about 0.2%, wiping out earlier gains.
Treasury yields rose. The 10-year yield climbed to 4.3%.
Warsh during his remarks mentioned the need for “regime change in the conduct of policy” and a “new inflation framework.”
Bond yields are sensitive to the outlook for inflation. Traders are trying to discern Warsh’s economic outlook and his view on the Federal Reserve’s role in managing inflation.
Meanwhile, oil prices moved higher as uncertainty lingers about the US-Iran ceasefire and the Strait of Hormuz. Brent crude and WTI each rose more than 1% to $96.73 and $88.70 per barrel, respectively.
Warsh refuses to directly answer whether Trump lost 2020 election
Sen. Elizabeth Warren said Tuesday she wanted to test Kevin Warsh’s level of independence, a longstanding commitment of Federal Reserve officials, by asking him whether President Donald Trump lost the 2020 election.
Warsh refused to answer, saying, “We try to keep politics, if I’m confirmed, out of the Fed.”
“I’m just asking a factual question… I need to measure your independence and your courage,” Warren responded.
“Senator, I believe that this body certified that election many years ago,” Warsh followed up.
Warsh refuses to answer question about $100 million in mysterious wealth
In a heated exchange, Sen. Elizabeth Warren pressed Kevin Warsh on the more than $100 million in assets he declined to detail in his financial disclosure forms, which revealed his personal wealth to be in the ballpark of $130 million to $210 million.
In his disclosure, Warsh cited previous confidentiality commitments in declining to name the specific assets, noting only the names of the private funds they’re nestled in. Democrats circulated a memo Monday urging the Senate to reject Warsh without more clarity about the nature of those investments.
“Did the Juggernaut fund or the THSDFS LLC invest in any companies affiliated with President Trump or his family, companies that have facilitated money laundering Chinese-controlled companies or financing vehicles established by Jeffrey Epstein?” Warren asked.
Warsh pivoted in his reply, reiterating he has worked with the Office of Government Ethics to divest those assets.
Of course, that wasn’t Warren’s question, and Warsh refused to answer one way or another.
Warsh's carefully curated approach to his confirmation hearing
The decision to have Republican Sen. Dave McCormick introduce Kevin Warsh for his confirmation hearing to become Federal Reserve chair, is notable for a couple of reasons.
When a nominee has a current member vouching for them ahead of a high-stakes confirmation battle, that has long been viewed as an important signal to colleagues.
But it’s also noteworthy in the wake of Sen. Elizabeth Warren’s opening statement, which signaled the intent to attack Warsh’s time as a Fed governor during the 2008 financial crisis.
McCormick, who has had a close friendship with Warsh for decades, was serving as a senior Treasury Department official during that period and was often with Warsh inside the room in some of the most intense and tenuous moments of that period.
McCormick, despite his short tenure in the Senate as a freshman, is well regarded by members of both parties as an honest broker with a pragmatic approach to legislating. It probably doesn’t hurt to have Larry Fitzgerald, the NFL legend known as much for his character off the field as his talents on it, seated directly behind Warsh and in the line of sight of every member and head-on television camera. (Warsh and Fitzgerald are close friends.)
Does any of this mean universal Democratic opposition is going to suddenly crack? Not even a little bit.
But it does demonstrate what I’ve been told repeatedly the last few weeks as Warsh and his confirmation team have worked through the initial stages of this process: This is a very professional, methodical, and well-thought-through approach to a process everyone knew would be highly contentious.
Warsh disagrees on "central casting"
President Donald Trump has frequently noted how Kevin Warsh is straight out of what he terms “central casting.” Warsh pushed back on that point Tuesday, in an attempt to break the tension in an already confrontational confirmation hearing.
In questioning with Sen. Elizabeth Warren about his ability to consider monetary policy independent of political interference from Trump, Warsh tried out some humor, noting, “I do have a disagreement, actually, with the president. I think even this morning he said that he thought I was out of central casting. But I’d look older, gray, or maybe show up here with a cigar of sorts.”
“Quite adorable,” Warren replied.
“But, you know, we need a Fed chair who is independent,” she continued. “That’s the only way we preserve the independence of the Federal Reserve. If you can’t answer these questions, you don’t have the courage and you don’t have the independence.”
Warsh previews big changes he has in store for Fed if confirmed, including "regime change"
Kevin Warsh wants to overhaul many parts of the Federal Reserve as we’ve come to know it over the past few decades, he told lawmakers on the Senate Banking Committee during his confirmation hearing on Tuesday.
Those changes include “a regime change in the conduct of policy” and a new “inflation framework.” Currently, the central bank targets 2% annual inflation, though it has fallen short of that goal for several years. Warsh didn’t share exactly what his new structure may look like.
“We need a new framework, new tools, and I’d also say, Mr. Chairman, new communications,” Warsh said. On the communications front, Warsh shared that he believes central bankers overcommunicate their views on interest rates through quarterly forecasts where officials are required to anonymously predict where they believe interest rates should be.
Warsh sworn in, kicking off with prepared remarks
Kevin Warsh has officially been sworn in and is sharing prepared remarks with the Senate Banking Committee. He’s begun by acknowledging his wife, Jane Lauder, an heir to the cosmetics empire and a senior executive at the company.
Warsh is "uniquely ill-suited" for the job of Fed chair, Sen. Warren says
Democratic Sen. Elizabeth Warren isn’t pulling any punches in laying out her case for not confirming President Donald Trump’s pick to run the central bank.
Warren homed in on nominee Kevin Warsh’s stint as Fed governor during and after the 2008 financial crisis in which millions of Americans lost their jobs, homes and savings. In a meeting with Warren last week, Warsh told Warren he has “no regrets about anything he did.”
In the lead-up to the crisis, Warren said, Warsh was “an enthusiastic cheerleader” for complex financial instruments that led to the near-collapse of the financial system, and he “dismissed repeated and increasingly urgent concerns from housing advocates across the country regarding subprime mortgages.” She accused him of being too loyal to Wall Street CEOs, and “worked tirelessly to arrange multibillion-dollar bailouts for them with nothing for American families.”
Warren also called out Warsh’s well documented flip-flop on interest rates that aligned his views with those of Trump as he won re-election in 2024.
Warsh's confirmation hearing kicks off with deep divisions
The confirmation hearing for Kevin Warsh as Federal Reserve chair has officially begun.
Republican Sen. Tim Scott, who heads the Senate Banking Committee, started by giving his endorsement for Warsh.
After Scott’s remarks, Democratic Sen. Elizabeth Warren, the ranking member of the committee, took a moment to acknowledge Democratic Sen. Mark Warner’s daugher, who passed away yesterday.
Warren went on to criticize Warsh’s background.
“Mr. Warsh was a Fed governor from 2006 to 2011, that’s before, during and after the crash, and he said to me that he has no regrets about anything he did,” Warren said.
“He was quick to respond to concerns from Wall Street CEOs, and he worked tirelessly to arrange multibillion-dollar bailouts for them with nothing for American families. No regrets, he says,” she added.
