Potential Fed chair pick Kevin Warsh speaks on CNBC

Potential Fed chair pick Kevin Warsh speaks on CNBC

Kevin Warsh, a former Federal Reserve governor and a strong contender for the position of Federal Reserve Chair, recently made headlines with his remarks on CNBC. Warsh, known for his staunch opposition to rate cuts during the 2008 financial crisis, has now shifted his stance to support rate cuts and the shrinking of the Fed's balance sheet. This reversal in policy aligns with President Trump's economic demands and signals a potential leadership change at the Fed.

In an interview on Fox News, Warsh argued that the Fed needs to cut rates and reduce its $7.7 trillion balance sheet. He believes that reducing the balance sheet would make room to bring down the federal funds rate, which in turn would lower the cost of credit for everyday Americans. Warsh also pitched a complete institutional reboot, claiming the Fed is no longer functioning as it should. He believes that the Fed's poor response to pandemic-era inflation and its refusal to admit policy failures have wrecked its credibility.

Warsh's shift in policy is not the only reason he has caught the attention of the Trump administration. He has been critical of the Fed's $2.5 billion renovation project, which has drawn fire from the White House. The project, initially pegged at $2.5 billion, has faced cost overruns and accusations of "fundamental mismanagement" from administration officials. Warsh has accused the Fed of "printing money and then spending $2.5 billion on a building without real congressional oversight."

The Trump administration has been considering whether it has the authority to fire Federal Reserve Chair Jerome Powell, with National Economic Council Director Kevin Hassett suggesting that the administration is looking into the possibility. Hassett's comments come as the administration has escalated its criticisms of the Fed's renovation project. The Federal Reserve has responded to these criticisms by posting a detailed FAQ page on its website, explaining the project's changes and costs.

Warsh's public reversal on rate cuts and his criticism of the Fed's renovation project have put him in a strong position to succeed Powell. His hands-on experience during the 2008 financial crisis and his alignment with Trump's economic demands make him a compelling candidate for the position. However, his shift in policy may face scrutiny from those who remember his past opposition to rate cuts.

As the Fed continues to face criticism and potential leadership changes, investors and financial professionals will be closely watching Warsh's public statements and the administration's response to the Fed's renovation project. The future of the Fed's monetary policy and its leadership remains uncertain, but one thing is clear: Warsh's public reversal has put him at the forefront of the conversation.

References:
[1] https://www.cnbc.com/2025/07/14/fed-chair-powell-asks-inspector-general-to-review-controversial-building-project.html
[2] https://www.cryptopolitan.com/feds-kevin-warsh-full-u-turn-on-rate-cuts/
[3] https://www.cnbc.com/2025/07/13/trump-can-fire-powell-if-theres-cause-hassett.html