The Senate on Wednesday confirmed Kevin Warsh to serve as the next Federal Reserve chair, by a 54-45 vote.
Just one Democrat, Sen. John Fetterman of Pennsylvania, joined all of the Senate’s Republicans in voting for Warsh.
The confirmation came two days before the term of the Fed’s current chair, Jerome Powell, expires. However, Powell is also serving a concurrent term as a Fed governor, which runs through January 2028. Powell said last month he would remain on the central bank’s board but keep a “low profile.”
Among Warsh’s first challenges is to establish credibility as a Fed chair who’ll act independently. President Donald Trump has been relentlessly clear in his desire for a lower interest rate, repeatedly belittling Powell and threatening to fire him when he didn’t acquiesce.
During his nomination hearing in April, Warsh told lawmakers that Trump "never, generally or specifically, instructed me [or] suggested I should commit to any interest rate path whatsoever.”
“If confirmed by this body, I take the integrity of the office and my personal integrity very seriously,” Warsh said.
Trump did, however, jokingly threaten to sue Warsh if he doesn't lower interest rates.
The next Federal Open Market Committee meeting June 16 and 17, presumably Warsh’s first as chair, could serve as a bellwether for his stance on interest rates – and monetary policy in general.
Ahead of Wednesday’s vote, Sen. Elizabeth Warren, D-MA, warned lawmakers that Trump intends to “install sock puppets at the Federal Reserve Board who are willing to artificially juice the economy” rather than take action to lower prices.
“Warsh’s confirmation = another step in Trump's attempt to take over the Fed,” Warren, the Senate Banking Committee’s ranking member, wrote on X after the vote.
White House spokesperson Kush Desai called Warsh’s confirmation “a welcome step towards finally restoring accountability, competence and confidence in Fed decision-making,” according to a statement seen by Banking Dive.
Sen. Tim Scott, R-SC, the Senate Banking Committee’s chair, used similar language, adding that the public wants “a Fed that stays focused on its core mission of stable prices, maximum employment and the American people, not politics.”
For months, however, Warsh’s nomination was explicitly political. Sen. Thom Tillis, R-NC, threatened to torpedo any Trump nominee for the Fed until the Justice Department agreed to drop an investigation into Powell. Although the DOJ said the probe was focused on whether Powell lied to Congress about over-budget renovations at the Fed, a district court judge ruled that explanation was a pretext for Trump’s desire to oust Powell in favor of a central bank chair who would lower interest rates.
Warsh is no stranger to the Fed. He became the youngest Fed governor in history when he was named to the board in 2006 at age 35. Before that, he was an investment banker at Morgan Stanley.
During the 2007-08 financial crisis, Warsh “played a central role in helping to arrange numerous multibillion-dollar, taxpayer-funded capital infusions to financial institutions,” Warren argued.
By the end of his tenure in 2011, however, Warsh had begun criticizing the Fed’s direction, asserting that the central bank’s push for quantitative easing had gone too far.
Warsh was a finalist, too, for Fed chair in 2017 but lost to Powell.
The incoming chair has since called for “regime change” at the central bank.
Wednesday’s vote was not the only one to which Warsh was subject this week. The Senate voted Tuesday to install him on the Fed’s board. That carries a 14-year term, and pushes Stephen Miran off the seven-person board.
Miran had typically been the Fed’s staunchest advocate for lower interest rates, dissenting each FOMC decision of his tenure. When the FOMC voted to hold interest rates steady, Miran lobbied for a quarter-percentage-point reduction. When the FOMC voted for a 0.25% reduction, he favored cutting by a half percentage point.
Banking trade groups generally praised Warsh’s confirmation. Rob Nichols, CEO of the American Bankers Association, said Warsh “will bring deep experience and a steady hand” to the role “during an extraordinarily challenging economic period.”
“As someone who used to work alongside Chair Warsh, I have seen firsthand his strong understanding of monetary policy, financial markets and the essential role banks play in the economy,” Nichols said in a statement Wednesday. “We look forward to working with him to further strengthen our financial system and spur economic growth.”
Warsh’s term as Fed chair will run through 2030.
