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Speaking before the Senate Banking Committee yesterday, Kevin Warsh—a Wall Street veteran, billionaire, and family friend of the president—insisted that he would be an “independent actor” if confirmed as Federal Reserve chairman. The real question was whether enough of his listeners believed him.
In some ways, Warsh is an uncontroversial choice for the role. He has many important credentials: He served on the National Economic Council during the George W. Bush administration, and was a Fed governor during the Great Recession. He was even on the short list to become chairman in 2017. His experience as a governor also informed some of his long tenure. criticism of the institution; in an op-ed last year, he laid out a vision to reduce central bank robbery. But overshadowing Warsh’s praise was Donald Trump’s ongoing campaign to rein in the Fed. Some committee members were more focused on questioning the nominee’s ability to resist presidential interference than they were on his resume.
The Fed has always been charged with making policy decisions based on its assessment of the economy, rather than simply accepting the direction of the president. Its seven governors are appointed for 14-year terms because they are meant to take a long view. This has not sat well with Trump, who has repeatedly criticized the current central bank chairman, Jerome Powell, for refusing to cut interest rates as quickly as he wants. Tensions between the two came to a head in January, when Powell revealed that he was on the ground federal investigation over his handling of the Fed headquarters renovation (three previous chairs condemned the administration’s move as an “unprecedented attempt” to interfere in monetary policy). Last week, Trump escalated the situation by threatening to fire Powell if he exercises his right to remain on the Fed’s board of governors once Warsh is confirmed—as Powell has said he will until the investigation is completed.
Trump has been clear about his expectations for the bank: “I want my new Fed Chair to lower interest rates if the Market does well,” he wrote on Social Reality in December. “Anyone who disagrees with me will never be Fed Chair!” Time campaign for that job, Warsh made an argument to say that he will reduce the standards. He has been bullish on inflation during his previous tenure at the bank, but has said more recently that AI-fueled productivity gains and the shrinking of the Fed’s balance sheet could justify cutting rates. During the hearing, Democratic senators pressed Warsh on whether his policies were his own, or strategic attempts to get the job. Elizabeth Warren called him a “sock puppet” of the president, even as Warsh insisted that he had not promised Trump any policy results in exchange for the position.
This hearing had already been delayed once, by the Democrats pushed last week to delay again until the Trump administration drops its investigation into Powell and Fed Governor Lisa Cook. For Warsh to be confirmed, Republicans will have to hold a key position within their own ranks: Sen. Thom Tillis has said for months that he would not support the nomination until the Justice Department clears the Powell investigation. Yesterday, Tillis demonstrated—literally—by reprinting a 2010 quote from Warsh that highlighted the importance of Fed independence. In the Trump era, many officials have promised to remain independent of the president, and not all have followed through. FBI Director Kash Patel and former Attorney General Pam Bondi, for example, both made that promise during their confirmation hearings and later steered their departments in a direction that clearly served the president’s goals.
Warsh repeatedly dodged questions that could put him at odds with Trump. He declined, for example, to say whether Trump lost the 2020 election. Warsh also played down the president’s threats against the central bank, saying that the Fed is not in any immediate danger of being forced out. “Feedback is up to the Fed,” he told senators. He also said that the central bank’s independence is not at risk when “elected officials express their views on rates.” But the president has already gone further than just speaking his mind.
His push to reshape the bank began in earnest last year with his attempt to fire Cook—the first of its kind in American history. Presidents can remove Fed board members “for cause,” but the “cause” the administration claims in this case is not, say, gross misconduct. It’s mortgage fraud. No criminal charges have been brought against Cook; He has pleaded not guilty and is fighting the case in court. The Supreme Court heard oral arguments in January—if the justices rule that the attempted shooting was legal, it could greatly increase Trump’s ability to shape the board to his liking.
The Fed cannot deal with economic uncertainty without strong and impartial leadership. Consumer sentiment, a key indicator of an economy’s health, hit a record low this month, and the war in Iran boosted inflation by nearly a full percentage point in March. If Warsh remains a defender of Fed independence, he may find himself in the same position as Powell. Warsh’s diplomatic response to the hearing may help him secure his new role, but it leaves important questions about the relationship between the independent Fed and the president regardless of how to put it.
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- Iran fired three ships and captured two of them in the Strait of Hormuz, one day after President Trump extended the ceasefire while maintaining the US blockade against Iranian ports.
- Virginia voters approved a Democratic-backed redistricting plan last night which can help the party to get up to four seats in the Parliament in the middle of the term. The move allows Democrats to redraw the state’s congressional map after Republicans pushed for similar efforts in other states.
- John Phelan is leaving his role as secretary of the Navy after months of tension with Defense Secretary Pete Hegseth, according to a Pentagon official. Hung Cao, the current deputy secretary of the Navy, will serve as acting secretary.
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Apple Is Boring Now
By Ian Bogost
Tim Cook’s job was to make Apple tired—and he did. Cook, Apple’s chief executive officer, is stepping down after 15 years in the role. He had succeeded Steve Jobs after the visionary co-founder of the Apple Computer Company died just months before dying of pancreatic cancer in 2011. Since then, Apple has grown in market value by 2,000 percent. It has also evolved into a staid, if highly efficient, company that sells glasses to people rectangleswireless earphonesand, sometimes, computer. This legacy is not sad, but sad.
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