Kevin Warsh: Trump's man at the Fed or independent voice?
Never before has a chair of the US Federal Reserve been so controversial. Who is Kevin Warsh? Can he preserve the Fed's independence, or will he become Donald Trump's puppet?
US President Donald Trump will hold a swearing‑in ceremony on Friday for the new Federal Reserve chair, Kevin Warsh — an unusual step, since Fed chairs are not normally sworn in at the White House, and presidents usually don't attend, given that the Fed is meant to be politically independent.
But some, particularly Democrats, question how independent Warsh will be as head of the world's most powerful central bank.
Among them is Democratic Senator Elizabeth Warren, who described Warsh as Trump's "sock puppet” during his Senate confirmation hearing in April. Stressing that independence requires courage, Warren asked Warsh: "Let's check out your independence and your courage. We'll start easy. Mr. Warsh, did Donald Trump lose the 2020 election?”
Warsh refused to answer directly, saying instead: "We try to keep politics, if I'm confirmed, out of the Federal Reserve.”
"The hearing failed to dispel doubts about his independence," Claudia Sahm, chief economist at New Century Advisors and former economist at the Federal Reserve, told DW.
This skepticism was then reflected in Warsh's confirmation vote — where only 54 senators voted in his favor while 45 voted against — "the narrowest majority by which a Fed chair has ever been confirmed," Sahm said.
US President Donald Trump will hold a swearing‑in ceremony on Friday for the new Federal Reserve chair, Kevin Warsh — an unusual step, since Fed chairs are not normally sworn in at the White House, and presidents usually don't attend, given that the Fed is meant to be politically independent.
But some, particularly Democrats, question how independent Warsh will be as head of the world's most powerful central bank.
Among them is Democratic Senator Elizabeth Warren, who described Warsh as Trump's "sock puppet” during his Senate confirmation hearing in April. Stressing that independence requires courage, Warren asked Warsh: "Let's check out your independence and your courage. We'll start easy. Mr. Warsh, did Donald Trump lose the 2020 election?”
Warsh refused to answer directly, saying instead: "We try to keep politics, if I'm confirmed, out of the Federal Reserve.”
"The hearing failed to dispel doubts about his independence," Claudia Sahm, chief economist at New Century Advisors and former economist at the Federal Reserve, told DW.
This skepticism was then reflected in Warsh's confirmation vote — where only 54 senators voted in his favor while 45 voted against — "the narrowest majority by which a Fed chair has ever been confirmed," Sahm said.
Trump is undermining the central bank's independence
Warsh's predecessor, Jerome Powell, knows firsthand what pressure from Trump would look like.
The US president repeatedly heaped insults on Powell for not lowering rates and even had the Justice Department launch an investigation targeting him.
The Fed is supposed to be politically independent, but if that were to change, it would have massive repercussions, said Kenneth Rogoff, an economist and professor at Harvard University.
"The Federal Reserve's independence is of unique importance in the global financial system. After all, the dollar is at the heart of the global financial system. If the US becomes unstable, it affects everyone," he told DW.
Will Warsh stand up to Trump?
The new head of the Fed brings with him both experience within the central bank as well as an understanding of how Wall Street works and what it wants. It should therefore be clear to him that he must avoid creating any impression that the central bank's course is being dictated by Trump.
Never before has a chair of the US Federal Reserve been so controversial. Who is Kevin Warsh? Can he preserve the Fed's independence, or will he become Donald Trump's puppet?
US President Donald Trump will hold a swearing‑in ceremony on Friday for the new Federal Reserve chair, Kevin Warsh — an unusual step, since Fed chairs are not normally sworn in at the White House, and presidents usually don't attend, given that the Fed is meant to be politically independent.
But some, particularly Democrats, question how independent Warsh will be as head of the world's most powerful central bank.
Among them is Democratic Senator Elizabeth Warren, who described Warsh as Trump's "sock puppet” during his Senate confirmation hearing in April. Stressing that independence requires courage, Warren asked Warsh: "Let's check out your independence and your courage. We'll start easy. Mr. Warsh, did Donald Trump lose the 2020 election?”
Warsh refused to answer directly, saying instead: "We try to keep politics, if I'm confirmed, out of the Federal Reserve.”
"The hearing failed to dispel doubts about his independence," Claudia Sahm, chief economist at New Century Advisors and former economist at the Federal Reserve, told DW.
This skepticism was then reflected in Warsh's confirmation vote — where only 54 senators voted in his favor while 45 voted against — "the narrowest majority by which a Fed chair has ever been confirmed," Sahm said.
US President Donald Trump will hold a swearing‑in ceremony on Friday for the new Federal Reserve chair, Kevin Warsh — an unusual step, since Fed chairs are not normally sworn in at the White House, and presidents usually don't attend, given that the Fed is meant to be politically independent.
But some, particularly Democrats, question how independent Warsh will be as head of the world's most powerful central bank.
Among them is Democratic Senator Elizabeth Warren, who described Warsh as Trump's "sock puppet” during his Senate confirmation hearing in April. Stressing that independence requires courage, Warren asked Warsh: "Let's check out your independence and your courage. We'll start easy. Mr. Warsh, did Donald Trump lose the 2020 election?”
Warsh refused to answer directly, saying instead: "We try to keep politics, if I'm confirmed, out of the Federal Reserve.”
"The hearing failed to dispel doubts about his independence," Claudia Sahm, chief economist at New Century Advisors and former economist at the Federal Reserve, told DW.
This skepticism was then reflected in Warsh's confirmation vote — where only 54 senators voted in his favor while 45 voted against — "the narrowest majority by which a Fed chair has ever been confirmed," Sahm said.
Trump is undermining the central bank's independence
Warsh's predecessor, Jerome Powell, knows firsthand what pressure from Trump would look like.
The US president repeatedly heaped insults on Powell for not lowering rates and even had the Justice Department launch an investigation targeting him.
The Fed is supposed to be politically independent, but if that were to change, it would have massive repercussions, said Kenneth Rogoff, an economist and professor at Harvard University.
"The Federal Reserve's independence is of unique importance in the global financial system. After all, the dollar is at the heart of the global financial system. If the US becomes unstable, it affects everyone," he told DW.
Will Warsh stand up to Trump?
The new head of the Fed brings with him both experience within the central bank as well as an understanding of how Wall Street works and what it wants. It should therefore be clear to him that he must avoid creating any impression that the central bank's course is being dictated by Trump.
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