Washington: President Donald Trump on Friday nominated Kevin Warsh, a Republican and former Federal Reserve governor, to succeed Jerome Powell as Chair of the Federal Reserve, a choice that is expected to usher in a significant shift in U.S. financial oversight and banking regulation. The announcement concludes months of intense speculation over who would lead the world’s most powerful central bank when Powell’s term ends in May.
Regulatory experts say Warsh’s appointment would likely bolster efforts to ease Wall Street bank rules and diminish the traditional independence of Fed regulatory supervision, aligning the central bank more closely with the Trump administration’s deregulatory priorities.
Warsh is widely expected to support an aggressive push to streamline bank capital and supervision rules led by Vice Chair for Supervision Michelle Bowman, another Trump appointee. Experts note that while Powell tended toward a cautious, moderating approach to deregulation, Warsh’s philosophy emphasizes broader political oversight of regulatory policy rather than insular Fed control.
“Warsh’s view that the Fed should not be independent on bank regulation suggests he will support (Treasury) Secretary Bessent and Vice Chair Bowman’s aggressive deregulatory agenda,” said University of Michigan professor Jeremy Kress, highlighting how the nominee’s approach may differ from the status quo.
If confirmed by the Senate, Warsh is likely to steer the Federal Reserve toward less stringent regulatory guardrails on large banks a shift that many in the financial industry have long campaigned for.
Warsh, 55, brings deep experience to the role, having served as a Fed governor from 2006 to 2011, where he played a key part in shaping central bank responses during and after the 2008 financial crisis. A former investment banker and currently a fellow at Stanford University’s Hoover Institution, Warsh has publicly criticized certain post-crisis regulatory reforms for hampering smaller banks and argued for stronger private sector involvement in financial oversight.
During his earlier Fed tenure, Warsh supported tougher capital and liquidity requirements, but later commentary, including opinion pieces and interviews, made it clear he viewed existing regulation as a brake on economic activity and small-bank growth. He has also indicated openness to reducing the Fed’s balance sheet, a policy that would shrink the central bank’s footprint in financial markets and shift greater responsibility to commercial banks.
Wall Street banks have largely welcomed the nomination, praising Warsh’s insider experience and deregulatory stance. Many industry leaders believe his tenure could unlock opportunities for dynamic growth and more flexible regulatory frameworks.
Some investors also view Warsh as favoring a lighter monetary policy touch, particularly in support of lower interest rates a position consistent with Trump’s own economic priorities, although markets have shown mixed reactions to the prospect of his leadership.
However, wariness remains among critics who caution that diminished regulatory safeguards could elevate systemic risks if not properly managed.
Perhaps the most consequential aspect of Warsh’s nomination is the potential erosion of the Federal Reserve’s regulatory independence. His view that political oversight should play a significant role in regulatory decision-making challenges long-standing norms of central bank autonomy, potentially deepening the administration’s influence over not just monetary policy but also supervision and rule-setting.
Legal scholars and financial analysts have highlighted that a less autonomous Fed could reshape U.S. financial governance, with implications extending beyond Wall Street to global regulatory coordination.
Warsh’s nomination now heads to the Senate for confirmation hearings, where lawmakers are expected to scrutinize his regulatory philosophy, prior record, and potential policy direction. The process will be closely watched by markets, policymakers, and international observers, given its significance for global financial stability and U.S. economic policy.