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THE WALL STREET JOURNAL
President Trump told aides and allies in early December that he wasn’t sold on picking former Federal Reserve governor Kevin Warsh to lead the central bank, according to people familiar with the matter.
Trump said at a cabinet meeting he had narrowed his list to one. Interviews with other contenders were suddenly canceled. Everything pointed to Kevin Hassett, a longtime economic adviser who runs the National Economic Council.
Then came the reality-TV show plot twist. Warsh was suddenly back in contention with what Trump viewed as a strong interview last week, according to an administration official. Fed governor Christopher Waller is also in the running, interviewing with Trump this week and picking up backing from corporate chiefs. Rick Rieder, a senior executive at BlackRock, is scheduled to be interviewed by Trump at the president’s private Florida club Mar-a-Lago during the last week of the year, according to a senior administration official.
A fight over the next Fed chair is playing out in Washington and on Wall Street, with industry titans and Trump allies taking sides and the candidates themselves jockeying for position.
Some Wall Street insiders have been advocating for Warsh, calling administration officials to make the case for him with the goal of edging Hassett out of contention, according to people familiar with the outreach. The campaign has focused, in part, on the argument that Hassett is too close to Trump to have credibility with bond markets as an independent Fed chair. Some in Trump’s orbit have grown frustrated by the maneuvering.
While Warsh’s Wall Street allies have tried to build up his candidacy, there is a third candidate—Waller—who is viewed as more independent than either Kevin. In a flash poll on Wednesday, 81% of the executives who attended a conference in New York said they wanted Waller for Fed chair. The two Kevins split the rest of the vote.
Kevin Warsh, who has longstanding Wall Street ties, has been passed over for the job of Fed chair before. © Tierney L. Cross/Bloomberg News
Kevin Hassett, a very serious man. (Anna Moneymaker/Getty Images)
Both front-runners are battling credibility questions, but from opposite directions. Hassett’s critics on Wall Street say his current job—in which he goes on television to defend the president’s policies and attack the Fed—disqualifies him from leading an independent central bank.
Warsh’s vulnerability is different: He wants the job so badly that some question whether his support of lower interest rates and Trump’s broader economic agenda is genuine. Warsh has said for months that he believes the Fed should be cutting interest rates and shrinking its balance sheet.
Some of Warsh’s business supporters believe he would be more independent from the White House than Hassett because they don’t think he would be as likely to cut rates if circumstances didn’t support it. Still, the president told The Wall Street Journal that the veteran financier made clear to him the Fed should lower rates.
“Until an announcement is made by President Trump, any reporting about the Federal Reserve Chairman nominations process is pointless speculation,” White House spokesman Kush Desai said in response to an inquiry for this story. The Treasury Department didn’t return requests for comment. Warsh didn’t return a request for comment.
Trump last week told the Journal he expects to be consulted on interest-rate decisions.
“I don’t think you can get this job unless you have made some promise to President Trump,” said Richard Fisher, a former Dallas Fed president who served 15 years ago alongside Warsh.
Animating the contest is Trump’s white-hot resentment over having picked Fed Chair Jerome Powell, a silver-haired central bank insider with a reputation as a nonideological pragmatist, to lead the Fed eight years ago. Trump still blames his then-Treasury secretary, Steven Mnuchin, for recommending Powell.
As a result of that episode, current Treasury chief Scott Bessent and other senior advisers don’t want to be seen favoring any candidate. Bessent has told friends in recent weeks that Trump is making the decision for the Fed and no one else, according to a person close to the Treasury secretary.
That vacuum has opened the door to pressure from Wall Street that some Trump allies believe is being orchestrated on Warsh’s behalf. Trump’s selection process is also often fluid because of the president’s tendency to change his mind as he contemplates important personnel decisions.
At a private conference in New York last week, JPMorgan Chase CEO Jamie Dimon said he believed Hassett would be more likely to cut rates quickly and that Warsh would make a great chair, according to people familiar with his remarks.
Dimon has also been in touch with administration officials about the Fed chair search, making similar arguments about the two contenders and pointing out positive traits for others in contention. Those close to Warsh and some Trump officials say they view Dimon’s comments to those both inside and outside the administration as the CEO’s support for Warsh.
When asked about his hawkish reputation at a private gathering of investment managers in June, Warsh cast himself as a truth-teller. “If the president wants someone who is weak, I don’t think I’m going to get the job,” he said, according to remarks reviewed by the Journal.
Warsh has longstanding ties to Wall Street. He is a partner at the family office of legendary investor Stanley Druckenmiller and had a stint at Morgan Stanley. Druckenmiller is also Bessent’s former mentor and boss.
Druckenmiller told the Journal he hasn’t urged Trump officials to take a look at Warsh for Fed chair. But Druckenmiller has made clear to his allies on Wall Street that he wants Warsh to be next in the job, according to people familiar with the matter. Druckenmiller didn’t return a follow-up request for comment on his conversations with other finance leaders.
Warsh has been passed over before—including by Trump, who interviewed him for Fed chair in 2017 before choosing Powell. People who have worked with Warsh say he is determined not to lose this time.
“We all know he’s campaigned for this for a very long time,” said Fisher.
Warsh has a history of campaigning hard. In 2009, he lost out on the presidency of the New York Fed, following a search process where people involved grew irritated as he talked up his job prospects through the press. As a White House aide before his appointment to the Fed in 2006, he had pushed so aggressively for a top Treasury Department job that President George W. Bush was forced to weigh in. Bush deferred to his Treasury secretary, who chose a more experienced official.
Renovation work continues on the Fed's Washington headquarters.
Some people in Trump’s orbit who had previously supported either candidate say they are growing uncomfortable with what they see as an operation to undermine Hassett. They view the attacks on Hassett’s independence as unfair—and as implicit criticism of Trump himself.
Hassett, during his interview with Bessent, was asked to respond to the critique that Wall Street views him as the most politically biased candidate on the shortlist, according to a person familiar with the matter. Hassett defended himself by arguing he had been right on the facts—and acknowledged he would have work to do in his first months on the job to win over skeptics, this person said.
Hassett has argued internally that the next Fed chair needs the academic heft to go toe-to-toe with the Fed’s staff of Ph.D. economists. The implication is that Warsh—like Powell, a lawyer by training—could be more easily swayed by them.
In recent days, Bessent has publicly defended Hassett against the independence critique.
Waller’s inclusion on the shortlist is notable because he doesn’t have a relationship with Trump but offers what other candidates lack: an intellectually consistent set of arguments for rate cuts and a demonstrated record of quietly driving institutional changes that Trump, Bessent and Warsh have said should be a priority.
His supporters point to how, from his relatively low-profile position, he has pushed back on race-based hiring programs, worked to eliminate the Fed’s climate-focused initiatives and killed the central-bank digital currency project in favor of private-sector stablecoin development—all moves that Trump is likely to view favorably. He has also overseen budget curbs at the regional Fed banks.
Fisher said whoever gets the job will eventually face a confrontation with a president who has said he wants interest rates slashed to 1%—a level typically seen only during recessions. “At some point, you’re going to have to do what’s right,” he said.
Write to Brian Schwartz at brian.schwartz@wsj.com and Nick Timiraos at Nick.Timiraos@wsj.com
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