Kevin Warsh: Trump’s ideal choice to push Fed to cut interest rates
On the face of it, Kevin Warsh looks like an ideal candidate to chair the Federal Reserve, the world’s most important central bank.The 56-year-old Ivy League economist, former Wall Street banker and presidential adviser ticks all the boxes.Unfortunately for Warsh, as he faces what could be a fraught nomination hearing, his biggest backer is also his biggest liability.In his second term, Donald Trump has attacked the Fed in a manner both unprecedented and unseemly.He has called current chair Jerome Powell – whom he also appointed – a “jerk” and “a stubborn MORON”, and repeatedly threatened to fire him.
The tension comes from Trump’s desire for lower interest rates,The problem: the president can’t set interest rates,But Trump thinks he’s found a saving grace in Warsh,Warsh is set to appear in front of the Senate’s banking committee for his nomination hearing on Tuesday morning, where he is expected to be grilled by Democrats and Republicans alike,The hearing comes at a tumultuous time for the central bank.
Trump’s campaign against Powell, whose term ends on 15 May, has led to a criminal investigation of his handling of renovations at the central bank’s headquarters.At least one Republican senator said he will try to block Warsh’s nomination until the investigation is dropped.Should he be appointed, Warsh will hold one of the most powerful roles in the US government with great influence over the US economy.Here’s what we know about him.Warsh’s career as an economist started in his undergraduate days at Stanford, where he studied under economist Milton Friedman, best known for providing the intellectual foundation for the era of free-market shareholder capitalism that took off in the 1970s.
“He had a huge effect on not just me, but generations of students that followed,” Warsh said in an interview, adding that he was “blessed” to study under the economist,Warsh went on to get a law degree from Harvard before starting a career in financial services, working in mergers and acquisitions at Morgan Stanley,In 2002, he left his Wall Street job to become an economic policy adviser under George W Bush and the executive secretary of the National Economic Council,Warsh in 2002 married Jane Lauder, the granddaughter of Estée Lauder whose eponymous cosmetics company made the family billions,Bush appointed Warsh, 35 at the time, to the bank’s board of governors in 2006.
In 2008, Warsh helped broker the sale of Bear Stearns, the investment firm whose fall ushered in the financial crisis, to JPMorgan Chase,He also developed a reputation as an “inflation hawk”, a nickname given to economists who staunchly believe in raising interest rates to combat high inflation, even at the risk of higher unemployment,As a Fed governor, Warsh made it clear that he sees the Fed’s role as one that deals exclusively with monetary policy and cautioned against the central bank slipping into “fiscal” territory – tax and spending decisions usually taken by the government,“The Fed, as a first-responder, must strongly resist the temptation to be the ultimate rescuer,No matter the congressional calendar or the pleadings of the elected,” Warsh said in a 2010 speech.
“The Fed’s credibility is severely undermined if it is perceived to wander from its mission into areas more appropriately handled by other parts of the government,”Though he was appointed for a 14-year term, Warsh left his post on the board in 2011, partly due to disagreements over the Fed’s post-financial crisis stimulus package,Since leaving the Fed’s board, Warsh has served as a lecturer at Stanford Graduate School of Business Hoover Institution and as an adviser to billionaire investor Stanley Druckenmiller,Economists largely agree that an independent central bank is key to having a stable economy,But while previous presidents refrained from publicly criticizing the Fed to respect the central bank’s independence from politics, Trump has treated Fed like a political enemy and made clear what decisions he believes it should take.
Trump has praised Warsh since he was appointed in January, saying that Warsh will deliver the interest rate cuts he’s been wanting since he started his second term,“You think [interest rates] will go lower this year?” Fox Business’s Maria Bartiromo asked Trump in an interview released last week,“When Kevin gets in, I do, yeah,” the president said,Earlier, Trump said that he made a “really big mistake” by appointing Powell in 2018 instead of Warsh, who reportedly interviewed for the job at the time, but was ultimately turned away,“I have known Kevin for a long period of time and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best,” Trump said in January.
“On top of everything else, he is ‘central casting’, and he will never let you down,”Before his nomination, Warsh made it clear that he believed interest rates should be lowered, saying in a November Wall Street Journal op-ed that the central bank had “broken leadership” that was shirking the economic growth brought on by the surge of artificial intelligence,“The world is moving faster, yet the Fed’s leaders are moving slower,” Warsh wrote,“They appear stuck in what Milton Friedman called ‘the tyranny of the status quo’,”Though Warsh has Trump’s full support, his nomination has been caught between the battle between Trump and the central bank.
Thom Tillis, a Republican senator from North Carolina, said he supports Warsh’s nomination, but will block it until Trump’s justice department drops its criminal investigation into Powell.Tillis’s block will help Democrats who are unified in their opposition to Warsh.Republicans have a narrow 13-11 majority on the Senate banking committee, meaning if Tillis blocks Warsh’s nomination, his confirmation will not advance to the full Senate for a vote.Democrats indicated they also plan to go after Warsh’s financial disclosures, which they say have not met the transparency standards that were met by other Fed nominees.Documents released before his hearing revealed that Warsh has assets worth at least $100m, which would make him one of the wealthiest Fed chairs in recent history.
Warsh disclosed the value of his assets but did not specify what holdings were in his largest investments, citing confidentiality agreements.Trump said last week that he would fire Powell if the Senate does not confirm Warsh as Fed chair by 15 May, the end of Powell’s term.But it’s unclear if Trump will have the power to do so.Though the supreme court has given Trump broad executive powers in his second term, the court seemed skeptical about Trump’s firing of Fed governor Lisa Cook last summer, a case the court has yet to rule on.Even if Warsh is eventually confirmed, he alone cannot deliver the rate cuts Trump has been asking for.
Though Warsh will have the most visible role on the board, he will have to convince the other 11 board members to cut rates, even as the Iran war has thrown the US economy into chaos,
UK politics: Matthew Doyle claims he never sought ambassador role – as it happened
Matthew Doyle, the former No 10 communications chief who got a peerage after he left Downing Street, has said that he “never sought” a post as an ambassdor and that he was “never aware of anyone speaking to the FCDO about such a role for me”.He was responding to the revelations at today’s committee hearing with Olly Robbins.I will post the full quotes when I get them.UPDATE: See 3.53pm for the full quote
UK agriculture deal with EU will not remove all red tape, peers told
A new agriculture agreement with the EU will not wipe out all Brexit paperwork but might pave the way for sales of Scottish langoustines and oysters, the House of Lords has heard.The UK and EU are close to finalising a sanitary and phytosanitary (SPS) agreement to reduce Brexit trade barriers, and while it will have “modest” impact on the UK economy the agreement will be significant, peers on the European affairs committee were told on Tuesday.It would spell the end of physical checks on farm produce and the end of the need for veterinary certificates, which cost £200 each.It could also remove the need to label food as “Not for EU”, which has been “a significant problem” for wholesalers and distributors, said William Bain, head of trade policy at the British Chambers of Commerce.Bain, who is Scottish, said it could reopen the door for exports of Scottish langoustines and molluscs
Olly Robbins: I was asked to find job for Starmer aide and not tell David Lammy
Downing Street pushed the Foreign Office to find a diplomatic role for Keir Starmer’s communications chief over the head of the then foreign secretary, the former head of the department has revealed.Testifying to MPs at parliament’s foreign affairs select committee on Tuesday, Olly Robbins said he had several conversations with No 10 about finding a role for Matthew Doyle, who was later suspended as a Labour peer after it emerged he had campaigned for a friend charged with possessing indecent images of children.Robbins said he had been asked not to mention the idea to David Lammy, who was foreign secretary at the time.Robbins described the conversations as part of more general pressure from people at the top of the government to place senior political figures in senior diplomatic posts. He made the revelation while testifying to the committee about the appointment of Peter Mandelson as Washington ambassador
Starmer still faces more questions than answers after Olly Robbins’ quietly damning defence | John Crace
Well, what would you do? You’re a top civil servant with more than 25 years of government service. You’ve worked for Tony Blair, Gordon Brown, David Cameron and Theresa May. You went through Brexit hell as a lead negotiator. You were sacked by Boris Johnson and were then brought back by Keir Starmer.You land a plum job as permanent undersecretary in the Foreign Office and do your boss a favour by appointing his man as ambassador to the US
Olly Robbins says he faced ‘constant pressure’ to get Mandelson in post
The sacked senior civil servant Oliver Robbins has said he was subject to “constant pressure” when he started working at the Foreign Office to get Peter Mandelson in post as soon as possible.He said the Cabinet Office urged the Foreign Office to allow Mandelson’s appointment as the UK’s ambassador to the US without the usual vetting process but the Foreign Office pushed back and the vetting eventually went ahead.In an extraordinary development, Robbins, who was sacked by Keir Starmer last week after the Guardian disclosed he had overturned a recommendation from UK Security Vetting (UKSV) to deny clearance for Mandelson, suggested he had done so without knowing the full extent of national security concerns over the Labour peer.The former permanent secretary made his decision to give clearance without seeing the UKSV form – which said there was a “high” overall concern and concluded “clearance denied” – or even knowing the details.Robbins also confirmed the Guardian’s story that senior government officials had considered whether to withhold from parliament sensitive documents about the vetting process, a story which was denied last week by the prime minister’s chief secretary, Darren Jones
Robbins’ account raises questions over whether he was misled on Mandelson vetting
An account of Peter Mandelson’s vetting process given by the former top civil servant Sir Olly Robbins has raised new questions about whether Robbins was misled about the findings of the agency responsible for vetting.Robbins, who was sacked from his role of permanent secretary at the Foreign Office last week after revelations in the Guardian, gave testimony about the process to a select committee.Robbins told MPs that he did not see the vetting file produced by United Kingdom Security Vetting (UKSV), which he described as existing in a “hermetically sealed box”.However, he said he was briefed on the risks it highlighted at a meeting on 29 January 2025 with a top Foreign Office security official. That was the day after UKSV had submitted its recommendation
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