Overview
- Kevin Warsh, President Trump’s nominee to succeed Jerome Powell in May, remains subject to Senate confirmation as legal and political frictions hang over the process, including a DOJ probe into Fed headquarters renovations and a Supreme Court case involving Governor Lisa Cook.
- Warsh has described “deadwood” at the central bank and said change may mean “breaking some heads,” a stance that could enable a significant reshuffle of Board of Governors staff if he is confirmed, though altering personnel at regional Fed banks would be harder.
- Analysts warn that shrinking the Fed’s roughly $6.6 trillion holdings of Treasurys and mortgage-backed securities could push long-term yields and mortgage rates higher, complicating the administration’s push for cheaper home loans.
- Fixed-income markets still anticipate modest rate cuts later in 2026, and observers note the chair holds one vote on the FOMC, though Warsh could pursue a narrower Fed remit and curb forward guidance and other disclosures.
- Warsh is a 55-year-old former Fed governor and Wall Street veteran with a Harvard Law background, prompting debate over his nontraditional path and whether he would maintain policy independence once in office.