Kevin Warsh faced tough questions during his Senate confirmation hearing Tuesday. Democrats, and sometimes even Republicans, took issue with his complex finances, relationship with President Donald Trump, and seeming wide-eyed support of promises of artificial intelligence. But one of Warsh’s core issues remained largely unquestioned. That’s his plan for what he calls “regime change” at the Federal Reserve.
For years, Mr. Warsh has been planning major changes to the way the Fed operates, right down to the definition of the word “inflation.” The plan passed the public hearing largely intact, and early approval would put Mr. Warsh in a good position to overhaul the Fed. Any attempt at major reforms is sure to generate opposition and disagreement within the Fed, as would efforts to lower interest rates rapidly. But Mr. Warsh said Tuesday that he welcomes “a good family feud” and that opposition from other Fed policymakers could only be seen as an advantage for Mr. Warsh as he seeks to upend the way business is done.
Warsh has faced attacks on his credibility since President Trump nominated him in January. The president has publicly called for interest rates to be lowered to 1%. He tried to remove one Fed director and encouraged the Justice Department to investigate current Fed Chairman Jerome Powell. Courts have decided on these issues.
Mr. Warsh sought to dispel concerns about Mr. Trump. Responding to repeated questions about what he said to President Trump, he told senators: “The president has never directed me generally or specifically or suggested that I should commit to any interest rate path.”
Kevin Warsh, U.S. President Donald Trump’s nominee for the next Federal Reserve Chairman, testifies during the Senate Banking Committee confirmation hearing at the U.S. Capitol in Washington, DC, on April 21, 2026.
Kevin Lamarque | Reuters
But it was followed by some difficult exchanges.
Sen. Jack Reed (D-R.I.) told Warsh, “I have to admire the way you’re circling around without answering questions.” “That’s a skill. Unfortunately, that’s not a good skill for a Federal Reserve chairman.”
Some prominent former Fed officials have also expressed doubts. Former Chairwoman Janet Yellen recently said it would be difficult for Warsh to sway the Federal Open Market Committee, where she would need a majority of the remaining 11 votes to change rates. “I really don’t think the FOMC will accept this in the short term,” Yellen said.
Probably not, and while Mr. Warsh cannot completely ignore other Fed officials, he has spent time since leaving the Fed in 2011 defining himself as the opposite of them.
“Milton Friedman’s words have always stuck with me,” Warsh said at the hearing. Mr. Warsh previously worked as a research assistant for Mr. Friedman, an influential conservative economist. “He was always concerned about government officials being seduced and left hanging by what he called the tyranny of the status quo. Status-quo practices and policies are especially harmful when the world is changing so rapidly,” he said.
Warsh will disrupt that status quo. At the hearing, he declined to commit to continuing the regular press conferences the Fed has held since the financial crisis. He would abandon forward guidance, the Fed’s way of signaling to markets the desired direction of interest rates. He would even distance himself from the Fed’s preferred measure of inflation, a core consumer spending measure, which he dismissed as a “broad picture of what’s going on” with prices. “No more rough swag.”
These ideas aren’t just window dressing for Warsh. That’s how he lowers long-term interest rates, which are hurting Americans in the form of higher mortgage and credit card rates. Warsh believes the market raised interest rates in response to the Fed’s chaotic policies, including the recent spike in inflation following the coronavirus, but the cause goes back even further. He argues that the Fed has lost credibility.
Warsh said he left the Fed in 2011 because he opposed a series of programs that at the time had entrenched the central bank too deeply into the U.S. economy. Much of that was due to the Fed’s asset purchase program, known as quantitative easing, which left $6.7 trillion in financial assets on the Fed’s balance sheet. Warsh said at the time that the plan was important to stemming the financial crisis but should have been scrapped long ago.
“Winning the fight against the 2008 depression was a necessary but insufficient condition for winning peace and securing a solid foundation for economic prosperity,” Warsh said in a speech in September 2009. The Fed needs to step back from micromanaging the economy, Warsh argued. He argues that the Fed has ignored “market discipline” and allowed distressed companies to fail. As a result, the economy is much weaker than it should be, and officials tend to jump at the first sign of trouble.
In 2023, after Silicon Valley banks and other financial institutions failed and were bailed out by the Fed and other government agencies, Warsh blamed the events on the Fed’s coddling of the economy. “A decade of free money, negative real interest rates, and massive asset purchases by the world’s central banks from their own treasuries has led to deep complacency in financial markets, regulators, and (market) participants,” he said in an interview that year.
Warsh’s diagnosis of the Fed’s problems is not that interest rates are wrong. Rather, he believes that the entire way financial institutions have viewed the world since the financial crisis is wrong. In his view, the problem is not solved by raising or lowering interest rates by a quarter of a percentage point. Rather, the problem will be solved by coming to the Feds and showing the market and the public that there is a new sheriff in town.
Despite the time advantage, it is too early to tell whether Mr. Warsh will be able to immediately advocate for the interest rate cuts demanded by President Trump. The longer his nomination lasts, the more likely it is that the Fed and other central banks will weather the oil price shock caused by the Iran war and return to concerns about weakening labor markets. That would make the case for reductions.
In any case, Mr. Warsh’s induction into the Fed amidst complaints from the central bank may only serve to make the case to the public that this is an institution that has lost its way. At least the Senate showed little sign of disagreeing.
