Kevin Warsh says he still bears the scars of the “darkest days” of the 2008 financial crisis.
Then newly appointed Federal Reserve Governor, Wersh served as a vital intermediary between the central bank and Wall Street as the financial system and the U.S. economy faced its most serious threat since the Great Depression.
“He brought a lot of real experience, he knew these people on Wall Street – he knew the difference between when they were debating his book and when they were bringing good information to us – and that was very, very valuable,” said former Fed Vice Chairman Don Cohn, whose office was next door to Warsh’s.
It’s a view echoed by Lloyd Blankfein, who led Goldman Sachs during the crisis. “Kevin didn’t stay calm in chaotic moments,” she recalled, pointing to a similar temperament and willingness to engage.
After nearly two decades, Wersch’s ability to balance competing demands is set to be tested as never before after Donald Trump named him as Jay Powell’s successor as Fed chairman on Friday.
Warsh will take the reins of the world’s top central bank during one of the most important periods in its 112-year history.
The 55-year-old will have to contend with Trump’s combative campaign for low interest rates and investors’ fears about the central bank’s independence.
The dollar rose on Friday in an early sign that investors remain confident that Welch will not be deterred by aggressive rate cuts by the White House.
“Kevin is very confident right now that you can have growth without inflation,” former hedge fund manager Stanley Druckenmiller told the FT in an interview on Friday. Warsh has been a partner in the Druckenmiller family office since 2011.
“He’s very open-minded to the so-called Greenspan approach in the late ’90s, looking at what’s going on and productivity,” Druckenmiller said, referring to Alan Greenspan, the former Fed chief who presided over the growth era before the financial crisis. “I think he’ll handle it appropriately.”
Warsh recently said AI will increase productivity, meaning central bank policy need not be so concerned that gains in workers’ take-home wages will fuel inflation. Such an argument could open the way for further Fed rate cuts.
Wersch’s voting record on monetary policy during his tenure as Fed governor between 2006 and 2011 has strengthened investor confidence.
Mohammed El-Erian, who leads fixed income asset manager Pimco and is an acquaintance of Warsh, said: “I think he’s a very known quantity and I’m comfortable with most of his ideas.”
He said Wersh was the last Fed governor who “made significant effort to understand market developments”.
It’s not just connections to Wall Street that Warsh has made in his four-decade career, which began in 1995 as an investment banker at Morgan Stanley. In 2002, he replaced Wall Street with government and joined the administration of George W. Bush as an economic adviser.
That same year, his marriage to Jane Lauder, a member of the billionaire family behind the Estée Lauder cosmetics empire, cemented his ties to the Republican establishment. His father, Ronald, who is close to Trump, was the US ambassador to Austria under Ronald Reagan.
Bush’s selection as Fed governor in 2006 made the then-35-year-old the youngest nominee ever to the central bank’s board.
But it is a different Republican president who propelled Warsh, who was born in Albany, the New York state capital, and studied at Stanford and Harvard universities, to the job he has long sought.
Trump considered Wersch as Fed chair before nominating Powell in 2017, according to people familiar with the matter. After Trump’s election victory in 2024, Warsh was also on the President’s radar for the role of US Treasury Secretary.
As Trump assembled his second-term Cabinet, Wersh was summoned to a meeting at the president’s Mar-a-Lago resort in Florida after Elon Musk argued that appointing Scott Besant would be “business as usual.”
While the Treasury role ultimately went to Besant, Warsh won admirers within the Trump administration for pushing for “fundamental reform” of an institution she believed had overstepped its mandate.
Last April, as global markets were reeling from Trump’s trade war, Warsh used a speech to the influential Group of 30 of former central bankers and top financiers, of which he is a member, to take aim at the Fed.
Warsh argued that “the changes in the role of the US central bank have been so sweeping as to be almost imperceptible. The Fed has taken on a much broader role inside our government on all matters of economic policy.”
Some of Warsh’s sharpest attacks are directed at policies he helped shape, particularly the central bank’s massive bond-buying spree. Warsh resigned as Fed governor in the spring of 2011, just months after the central bank voted to buy more bonds.
He said, “In my view, efforts made far and wide in all climates and for all reasons have led to systematic errors in the conduct of macroeconomic policy.”
If he is confirmed by the Senate, Warsh will join the US central bank, which is divided over whether it should prioritize fighting inflation or supporting the weak jobs market.
Alan Schwartz, who led Bear Stearns during the financial crisis and is now executive chairman of Guggenheim Partners, said he was confident Warsh would be able to build consensus on the board.
“It’s one of the requirements of being Fed chairman,” he said. “You cannot be dictatorial about policy. The Varsh Group will bring seriousness to the discussion which will lead to consensus.”
The Fed has cut rates three times in 2025. But officials signaled this week that, with inflation still above their 2 percent target, the possibility of more action remains high. At a range of 3.5 to 3.75 percent, interest rates remain well above Trump’s 1 percent level.
Like all the other candidates interviewed for the role, Warsh claims there is scope for further reductions in rates.
Her call for the US central bank to revisit the 1951 Treasury-Fed agreement, the template on which the Fed’s independence from the executive branch is based, echoes the views of Besant, with whom Warsh is considered close.
But he has run into trouble with central bank insiders who consider his fierce attacks against the institution unfair. He also believes that some of Warsh’s claims, such as the idea that central banks should radically shrink their balance sheets, are ill-conceived.
Cohn said that although he was “in favor of bringing in new thinking and making things better”, he had doubts about the merits of some of Warsh’s ideas.
“There is a certain amount of truth in some of her criticisms, though not all, but then they went too far,” said the now former vice president at the Brookings Institution think-tank. “But he knows the institution. And I think he respects the history of the institution.”
