Kevin Warsh has been confirmed by the US Senate to take over the role of the Chair of the Federal Reserve. President Donald Trump nominated Warsh for the four-year term as the central bank’s independence comes under attack and inflation hits a three-year high. The Senate voted 54-45 to confirm Warsh for the post. The vote has taken place ahead of Powell’s expiring tenure on Friday.
How is the Chair selected?
As per the Federal Reserve Act of 1913 and Banking Act of 1935, the chairman is chosen by the president from among the sitting governors to serve four-year terms with the advice and consent of the Senate. The Senate Committee responsible for vetting a Federal Reserve chair nominee is the Senate Committee on Banking.
Who is Kevin Warsh?
Warsh was born in Albany, New York, on April 13, 1970. He graduated from Stanford University with a bachelor’s degree in public policy in 1992 and a Harvard Law School Doctorate in 1995.
Before his entry in the Board of Governors, he had worked with Morgan Stanley as an associate. In 2002, he was nominated to the National Economic Council as a special assistant to the president for economic policy and the executive secretary by then President George W. Bush.
Warsh is the youngest Federal Governor, having joined the Federal Reserve Board of Governors in 2006. He was 35 at the time. He stayed at the Federal Reserve until 2011 and became one of the important faces inside the central bank during the 2008 global financial crisis.
After leaving the Federal Reserve Board of Governors, Warsh became a partner at the Duquesne Family Office, the firm of Stanley Druckenmiller, and he served on the board of directors for United Parcel Service and Coupang. He also became the Shepard Family Distinguished Visiting Fellow at the Hoover Institution and a visiting scholar at the Stanford Graduate School of Business.
What to expect from the Warsh Era?
Reducing the size of the Fed’s $6.7 trillion balance sheet, coordinating more closely with the Treasury Department on the balance sheet, reducing the number of policy meetings annually from eight to as few as four, holding fewer news conferences, reducing the size of the Fed’s Washington-based workforce, and not giving frequent clues about the direction of interest rates are all ideas or suggestions made by the incoming Fed chief.
Warsh is expected to lead his first Federal Reserve meeting on June 16 and 17, where policymakers are likely to hold heated discussions over what should happen next with interest rates.
