Tangle - Kevin Warsh tapped for Fed chair.

Episode Date: February 3, 2026

On Friday, President Donald Trump announced his nomination of former Federal Reserve Governor Kevin Warsh to be the next chair of the Federal Reserve, choosing him to succeed current Chairman Jerome Powell when Powell’s term expires in May 2026. The nomination will now go to the Senate for confirmation, where Sen. Thom Tillis (R-NC) has vowed to block its advancement in the Senate Banking Committee until a Justice Department probe into Powell is resolved. Ad-free podcasts are here!To listen to this podcast ad-free, and to enjoy our subscriber only premium content, go to ReadTangle.com to sign up!You can read today's podcast⁠ ⁠⁠here⁠⁠⁠, our “Under the Radar” story ⁠here and today’s “Have a nice day” story ⁠here⁠.You can subscribe to Tangle by clicking here or drop something in our tip jar by clicking here. Take the survey: What do you think of Warsh’s nomination? Let us know.Our Executive Editor and Founder is Isaac Saul. Our Executive Producer is Jon Lall.This podcast was written by: Will Kaback and audio edited and mixed by Dewey Thomas. Music for the podcast was produced by Diet 75.Our newsletter is edited by Managing Editor Ari Weitzman, Senior Editor Will Kaback, Lindsey Knuth, Bailey Saul, and Audrey Moorehead. Hosted on Acast. See acast.com/privacy for more information.

From executive producer Isaac Saul, this is Tangle. Good morning, good afternoon, and good evening, and welcome to the Tangle podcast. A place where you get views from across the political spectrum, some independent thinking, and a little bit of our take. I'm your host today, Senior Editor Will K back. A bunch of the Tangle team is going to be congregating in Philadelphia this week for some in-person meetings. So John is currently in transit right now, and I'm filling in for him. I also wrote today's take, so you're going to be hearing a lot from me. So settle right in, and I'm excited to jump into it with you.

The topic that we're going to be covering today is President Trump's pick to replace Federal Reserve Chairman Jerome Powell when his term expires in May. And that nominee, who was announced on Friday, is Kevin Warsh, who is a former Federal Reserve Governor. he served on the board during the financial crisis in 2008 and 2009. More recently, he served as a visiting fellow at Stanford's Hoover Institute. So he has an interesting background, a little bit of an unorthodox background. We're going to be breaking down what went into the pick

and what we might expect about how Warsh could lead the Fed amid a time of, I would say, fairly unprecedented conflict between President Trump and the executive branch and the central bank. So before we dive in, a quick plug for an interview that we're putting out today. Last week, Isaac sat down with Elliot Williams, who is a CNN anchor and an author, to discuss his new book called Five Bullets. The book retells the story of Bernie Gets, the crime-ridden New York of the 1980s, and how the shooting that Gets was involved in mirrors so much of what we see in today's politics.

It's a really great interview. I actually just had a chance to listen to it myself. and it came at the end of our latest episode of Suspension of the Rules. So if you check out that episode, you can also hear Ari, Camille, and Isaac discuss how they interact with law enforcement against the backdrop of some recent stories involving law enforcement interactions. And also Isaac's piece about Kanye West on Friday. So you can listen to it on the Tangle podcast page. We also have it as a YouTube video that you can check out on our channel there. We'll put the links to both in our show notes for today.

And now let's get started with the quick hits for today. Number one, the House Rules Committee advanced a funding bill that would end the partial government shutdown that began on Saturday. The chamber is expected to vote on the bill on Tuesday today. Number two, a federal judge blocked the Department of Homeland Security's attempt to end temporary protected status for approximately 350,000 Haitian nationals living in the United States. finding that Homeland Security Secretary Christine Nome did not have the authority to terminate the status. Number three, Fulton County, Georgia will sue the Federal Bureau of Investigation and the Justice Department over a search warrant executed last week,

which resulted in hundreds of boxes of materials related to the 2020 presidential election being seized. The county believes the warrant was improperly issued and seeks to have those materials returned. Number four, President Donald Trump announced a trade deal with India. The agreement will lower U.S. tariffs on Indian imports from 50% to 18%, while India will lower trade barriers for U.S. imports and stop its purchases of oil from Russia. And finally, number five, representatives from the United States and Iran are expected to meet in Turkey on Friday to discuss Iran's nuclear weapons program and ongoing tensions between the countries. The foreign ministers of Saudi Arabia, Qatar, the United Arab Emirates, Egypt,

Pakistan and Oman have also been invited to join those talks. President Trump announced Kevin Warsh as his pick to lead the Federal Reserve. In the whole country, I would say that this was the perfect candidate. Investors are likely to see Warsh as a safe pair of hands. After all, he was at the Fed during a serious crisis in 2008. The bigger question is, what does he do once he's leading the place? He's attacked the Fed first for keeping rates too low, and now for keeping rates too high.

On Friday, President Donald Trump announced his nomination of former Federal Reserve Governor Kevin Warsh to be the next chair of the Federal Reserve, choosing him to succeed current chairman Jerome Powell when Powell's term expires in May 26. The nomination will now go to the Senate for confirmation, where Senator Tom Tillis, a Republican from North Carolina, has vowed to block its advancement in the Senate Banking committee until a Justice Department probe into Powell is resolved. President Trump has had a contentious relationship with the Federal Reserve in his second term. Throughout 2025, Trump criticized Powell for not cutting interest rates quickly enough.

Then in January, the Department of Justice launched a criminal investigation into Powell for alleged mismanagement of the Fed's headquarters renovation. Trump has also targeted other Fed policymakers, attempting to fire Governor Lisa Cook in August over alleged mortgage fraud. Last week, the Federal Reserve's Open Market Committee, the FOMC, held its most recent meeting to set the Fed's federal funds rate, holding its benchmark interest rate at 3.5% to 3.75%. The majority of the FOMC judged that inflation is still above its goal, and labor markets are strong enough to warrant no change.

President Trump has publicly pushed for steeper rate cuts, at times advocating for rates as low as 1% to stimulate economic growth. Governor's Christopher Waller and Stephen Myron, both Trump appointees, publicly dissented from the FOMC's majority decision, pushing for a cut. Warsh, who is 55, served on the Fed's Board of Governors from 2006 to 2011 as its youngest ever governor, acting as a key liaison to Wall Street during the 2008-2009 financial crisis. He currently serves as a visiting fellow at Stanford's Hoover Institution and is known for both crisis-era leadership, and his critiques of Fed policy under recent chairs. Before selecting Warsh, Trump considered a short list that included White House Economic Advisor Kevin Hassett,

Federal Reserve Governor Christopher Waller, and Black Rock executive Rick Reeder. Republicans in Congress have mostly supported Warsh's nomination. Senate Banking Committee Chairman Tim Scott, a Republican from South Carolina, said he was, quote, confident Kevin will work to instill confidence and credibility in the Fed's monetary policy. However, Warsh's chances of confirmation are uncertain without Senator Tillis' support in the banking committee. As committee, Democrats uniformly oppose the nomination until the Justice Department's probes into Powell and Cook are dropped. Quote, any consideration of Kevin Warsh's nomination can only come after this president stops trying to use the Department of Justice as his political attack dog against the Fed Board. Ranking member Andy Kim, a Democrat from New Jersey, said.

Today we'll get into what the right and left are saying about Warsh's nomination. Then I'll give my take. We'll be right back after this quick break. Here's what the right is saying. The right broadly supports Warsh, believing that he will provide a much-needed course correction for the Fed. Some questioned whether President Trump's pressure will influence Warsh's decision-making. Others think that Warsh will not bring much change to the Fed.

The Wall Street Journal editorial board called Warsh the right choice for the Fed. Mr. Warsh has in recent years offered a searching critique of Fed policy since the financial panic. He has been especially pointed in saying that the central bank has taken on a broader role in economic policy than it should. This institutional drift, as he put it, has caused the Fed to lose the plot on its essential mandate, which is price stability. The Fed has also wandered into fiscal policy with its bond buying that has underwritten excessive federal spending and asset purchases that contributed to the misout of capital. And that's without its Biden-era political bows to consider climate change in financial regulation and the racial impact of monetary policy. Mr. Warsh will steer the Fed away from all of that. He will also aim to reduce the Fed's balance sheet that has ballooned into the trillions of dollars

from merely some $800 billion when Mr. Warsh first joined the Fed. None of this will be easy. He will face opposition from many on the Fed staff and from the central banking cleracy that includes the recent Fed chairs he has criticized. The Senate should consider the latter a recommendation. He will also have to navigate the man in the White House who thinks interest rates should only go down. But Treasury Secretary Scott Besson can help on that front. National Review's editors asked,

Kevin Warsh, Hawk, or Dove? Warsh's resume is indeed one from central casting. Stanford, Harvard, Morgan Stanley, George W. Bush's White House, appointed as the youngest ever Fed governor in 2006. but what makes it stand out is its chronology. A little more than a year after Warsh took office, increasingly severe market turbulence

heralded the approach of the global financial crisis, a storm that, as someone with experience and good connections on Wall Street, he was well equipped to navigate, as he duly did. During the financial crisis, Warsh was a hawk on monetary policy. He was concerned about an imminent inflationary threat in 2009. The question for Warsh, who we should note has only one vote on the board, is how his long-standing hawkishness on inflation can be reconciled with the views of a president for whom, it seems sometimes, no interest rate can be too low. Warsh may be put to

the test on this issue in short order. The latest inflation report on producer prices came in hotter than expected, while cutting rates is not inflationary in every single instance. At this time, any further rate cuts would not only be premature, but would, in the end, be likely to be counterproductive by forcing rates up, especially if there's any perception, a high risk currently, that Warsh has been bullied into it. In MarketWatch, Jai Kedia said Warsh needs to keep the Fed out of politics. Warsh's best and most consistent policy view is his opposition to quantitative easing, QE. Warsh has continued to advocate for a smaller balance sheet that would allow monetary policy to revert to its pre-2008 system that, while imperfect, is far better than now.

Warsh has also criticized the Fed's mission creep, and he's right to do so. The Fed cannot fix everything, and trying to do too much only serves to detract from its core mission. Doubtless, as Fed chair, Warsh will be pressured by politicians to help with ballot box issues. He should stand firm on principles and reject Fed involvement. Crucially, this also means standing up to the president. Warsh has a better chance than Fed Chair Jerome Powell or former chair Janet Yellen to implement such serious reform. But all things considered, it's doubtful that any serious changes will be implemented by changing the Fed chair alone. Take quantitative easing as an example. We were assured that it was a temporary measure when it was first implemented. It has been almost 20 years since,

and massive asset purchases that were once an unconventional monetary policy tool are now standard practice. It will be too tempting and too easy to interfere in asset markets once again at the first sign of economic distress. And Warsh's tenure as governor already records him voting in favor of QE despite his reservations. Now here's what the left is saying. The left has a mixture of support and concern on Warsh's nomination. Some criticize Warsh's record as a Fed governor. Others believe that the systems in place will limit his options for reform. In the free press, Jason Furman laid out four rules for the new Fed chair. Warsh clears the substantive bar for the job. He's quick, intellectually serious, and capable of engaging with arguments he disagrees with. He understands the Fed, the executive branch,

and financial markets. He has the raw materials to be an excellent Fed chair. But success won't hinge on technical mastery alone. It will depend on whether he can meet four tests, of judgment and temperament, tests that reinforce one another. Independence without technocratic discipline becomes politics. Technocracy without leadership becomes drift. Leadership without humility becomes dogma. Humility without independence becomes capitulation. The job demands all four.

The foundation of everything else is whether Warsh will aggressively protect the Fed's independence. In pursuing the position, he shaded his rhetoric toward Trump's preferences more than I would have liked. History will judge Warsh on whether or not he corrects, or overcorrects in the opposite direction, once in office. Warsh is a Republican political figure. He wouldn't be the first chair with deep partisan roots.

In illustrating the right attitude for the Fed to take, Warsh has used examples like issuing commentary on climate change and inclusion. But the same principle should apply equally to tax cuts and energy regulation. The Fed cannot be selectively neutral. In the New York Times, Catherine Rampel described what worries me about Trump's new Fed pick. Let's start with the good news. Mr. Warsh is a dramatically better option than some of the alternatives Mr. Trump was considering. Kevin Hassett, formerly seen as the top contender, kissed up to Trump so overtly that investors took his subservience for granted and greatly feared what the loss of Fed independence would mean for the economy.

Mr. Warsh knows this. Quote, if the Federal Reserve lost its independence, its hard-earned credibility would quickly dissipate, he said in a 2010 speech titled an ode to independence. But there are reasons to wonder if he still heeds those words. Among them, he has abandoned some of his long-held views just in time to audition for Fed Chair. Mr. Warsh is seen as an inflation hawk. The day after Lehman Brothers filed for bankruptcy in 2008, Mr. Warsh, who was then a Fed governor, was still concerned about the possibility of spiking inflation. Instead, the Fed's preferred measure of inflation immediately turned negative, thanks to cratering demand. Of course, plenty of people get predictions wrong,

but not usually this wrong, without acknowledgement or explanation of how they'd avoid a similarly catastrophic error next time, particularly when expecting a promotion. This brings me to the political expedience that seems to sway Mr. Warsh's choices. He has twice made an abrupt aboutface on his usual demands for tighter money, and both occurred when Mr. Trump was in office. In the Council on Foreign Relations, Roger W. Ferguson Jr. and Maximilian Hippold argued, Kevin Warsh won't revolutionize the Federal Reserve. After years of railing against what he views as misguided monetary policy, Trump aims to resolve his issues with the central bank by installing an ally in arguably the most influential economic post in the United States. Yet, if the

president expects a dramatic transformation at the Fed that will lead to significant interest rate cuts, he's likely to be disappointed. Financial markets and economic realities will impose strict limits on the next chair. Interest rate decisions are not made by the Fed chair alone. They are determined by the Federal Open Market Committee, a 12-member body. The structure of the FOMC, the state of the economy, and financial markets could prove to be the strongest constraint of all. Trump grew up Trump grew frustrated with his first appointment, and he's likely to encounter similar limits, even with a loyalist in the role. More plausible than a revolutionary Fed is a chair who communicates differently and echoes Trump's views on the economy without implementing his most radical ideas.

In the end, Trump may be satisfied simply knowing that his vision of an A-plus-plus-plus-plus economy is validated by the Federal Reserve. All right, that is it for what the right and left are saying. Now we'll get into my take. One of President Trump's truly unique qualities is his ability to elevate topics to the public consciousness that would not have garnered much attention in previous administrations. One prime example from the past year is how the president made his choice for the next federal reserve chair

a reality television show, teasing different names, generating speculative news cycles, and raising persistent questions about his pick's influence on the seven. central bank. For some civics teachers out there, Trump probably provides some incredible material. Could any other politician generate such sustained public examination of something like Fed independence, or for that matter, trade deficits, immigration law, housing policy, foreign affairs, and so on? Of course, why these issues receive so much attention under Trump would make those same civics teachers sweat. The president is upending norms and institutions that many of

take it for granted, as things no president could or would try to disrupt. With the Fed, he has repeatedly attacked its leadership for refusing to cut interest rates fast enough, castigating current chair Jerome Powell for months, attempting to fire Fed Governor Lisa Cook on dubious charges, and standing by as his Justice Department investigates Powell on similarly questionable grounds, if not outright, directing that investigation. All the while, the economy is flashing a mix of green and red signals, making decisions difficult for the Federal Open Market Committee as they try to chart a path forward. Amid this confusion, enter Kevin Warsh. President Trump's attacks on the Fed have made this pick feel existential, and among the political

and economic commentators I follow, the most common reaction to Warsh's selection was relief, driven more by who Warsh is not rather than who he is. In particular, if Trump had nominated National Economic Council Director Kevin Hassett, who has displayed consistent fealty to him. It would have raised significant concerns about the president's control over the central bank. At the same time, some of Warsh's strengths as a candidate play almost too much to Trump's preferences. Warsh escalated Trump's critiques of Chairman Powell at an opportune time. His father-in-law, Ronald Lauder, is a longtime friend of the president, and not insignificantly, he looks like Trump's idea of a Fed chairman out of, quote, central casting in Trump's own words when he announced the pick.

However, I think Warsh is a fine pick. He's amply qualified, and he has a refreshing perspective on monetary policy that I think will move the Fed toward more responsible policies. I also think he'll be a far cry from a Trump sycophant, since Warsh's record stands starkly opposed to Trump's desires in one very important area, interest rates. Warsh has consistently argued that the Fed's most important job is fighting inflation. As a Fed governor during the 2008-2009 financial crisis, he maintained a focus on inflation, even as the unemployment rate near 10%. During the Biden administration, he roundly criticized the White House and Fed policymakers for ill-advised decisions that he said led to surging inflation, and he called for, quote, fiscal and monetary regime change.

If he becomes Fed Chair, Warsh's tendency toward inflation fighting measures could easily put him in conflict with the president who wants rate cuts at all costs. Warsh served on the FOMC during the Great Recession, and he now returns to the central bank as it sizes up another tenuous economic moment. He has described this moment optimistically, arguing that Trump's tax cuts and focus on deregulation boosts in artificial intelligence and American innovation will drive, growth. Furthermore, Warsh argues that changes in regulation and spending can do more to fight inflation than the FOMC could by raising its rate, which would allow interest rates to stay low.

Two ideas informing this view stand out. First, Warsh thinks AI will increase productivity and wages without weakening the labor market. Now, I don't share this rosy view. I worry that hiring will continue to slow and some sector's workforces will shrink as AI adoption increases. though it's also important to note that this discernible impact on hiring is still fairly negligible. But the second idea is most interesting and potentially most transformative. And that is that Warsh advocates for controlling inflation through reducing the Fed's balance sheet, the sum of its assets and its liabilities. Warsh actually left the Fed over his opposition to continuing quantitative easing,

which in simple terms is creating new money and using it to buy government bonds and other assets from banks, theoretically encouraging more lending and economic activity. And this was after the most acute period of the financial crisis had passed. Quantitative easing has driven up the balance sheet, and in Warsh's view, a reduction creates room for further interest rate cuts, which will spur economic activity without needing to print money. Now, I'm not certain whether this strategy will work, but I do find this argument compelling, even more compelling than his view on AI.

So how then might Warsh actually lead? Well, reducing the balance sheet would require rapidly selling assets, a move that likely would destabilize markets. And after years of getting used to easy money from the Fed, the government and Wall Street would certainly feel the strain as well. So it's one thing to say this as a critic on the outside. It's another entirely to argue it from the chair. In Warsh's own words, such a monumental policy shift requires, quote, political

courage and policy conviction. Does he possess those qualities? We simply won't know until we see him in action. Even if Warsh does try to reduce the Fed's balance sheet, he'll have to do so gradually, meaning raising rates will still be on the table. Even if Warsh does try to reduce the Fed's balance sheet, he'll have to do so gradually, meaning rates could hold steady for some time or even be raised. And even if Warsh advocates for cuts, the federal open market. Market Committee can still vote to keep them where they are. What's more, the independence of the chair and board members could soon be reaffirmed if the courts reject Trump's attempt to have Lisa Cook removed. So the upshot is, even if Trump gets everything he wants from Warsh, the interest rate could

still stay higher than he wants, and Trump couldn't do much about that. Now, I want to take a beat because we are getting a little bit ahead of ourselves. A lot could change before Warsh is confirmed, if he even is confirmed. Trump's attacks on the Fed have ensured a bruising confirmation process, and Senator Tillis could stop that process in its tracks. Now, I still expect Warsh to be confirmed eventually, with some Democratic support even, but we'll learn a lot more about how he approaches the role

in the weeks and months ahead as that confirmation plays out. Concerns about Trump's influence will also remain until we see how Warsh handles his first high-pressure decisions. I'm more optimistic than many on the left that he's up for the challenge, but I also feel the frustration that we have to consider the new chair's independence at all. Presidents from both parties have, of course, tried to influence Fed decision-making, but Trump's actions really have no historical comparison besides President Richard Nixon's 1972 pressure campaign on Fed Chair Arthur Burns to keep rates low, an effort that notably helped entrench inflation. We shouldn't get comfortable with these kinds of attacks on the central bank, nor should we assess Warsh uncritically just because he was a less extreme choice. Still, I can't help but feel a little relieved to be discussing issues like quantitative easing and artificial intelligence

instead of how many rate cuts a chairman Hassett might push through before the midterms. We'll be right back after this quick break. All right, that is it for my take. Now let's get into today's audience question. Today's question comes from Shari, submitted through our texting service subtext. The question is, why would you post about the Epstein files on X

when Elon Musk is in the recently released pages? Will Tangle be covering those 3 million pages? Here's our response. Among the roughly 3 million files the Justice Department released Friday to comply with the Epstein Files Transparency Act, where emails, photographs, FBI reports, and apparent anonymous,

Hips related to the Epstein investigation. The emails included exchanges between some very notable people, including Jeffrey Epstein and Elon Musk. One thread between Epstein and his executive assistant regarded Musk visiting Epstein's island. However, a subsequent exchange casts uncertainty over whether such a visit ever occurred, and Musk continues to publicly deny that he ever visited the island. The DOJ also released further documents regarding connections between Epstein and President

Donald Trump. It's important to note that these documents included tips made to the FBI, which are notoriously unreliable. In this case, many of the tips going viral online are unsubstantiated by any further evidence. Furthermore, the files include no direct exchanges between Epstein and the president. Other notable names appearing in the release are Bill and Hillary Clinton, who have since agreed to testify before Congress in its investigation into Epstein. Steve Tisch, the owner of the New York Giants, Bill Gates, the founder of Microsoft, and Peter Attia, a researcher in CBS News contributor, whose comments in the files have led to significant backlash. Some of the emails include salacious, vulgar, and embarrassing exchanges,

but again, they contain no significant evidence of new criminal misconduct. The file's release was complicated by the accidental inclusion of nude photographs and victims' names and identifying details, which were meant to have been redacted. On Wednesday, a federal judge, judge will consider victims' request to shut down the website that hosts the files after these improper disclosures. Deputy Attorney General Todd Blanche said this release concludes the DOJ's obligations. However, critics argue that the DOJ's decision to withhold several million more files is a violation of the law. All right, and now here is today's Under the Radar story.

On Wednesday, February 4th of this year, the last U.S. Russia nuclear treaty expired. fires. The treaty, called New Start, was signed by President Barack Obama and Russian President Dimitri Medvedev in 2010, placing limitations on several types of nuclear weapons. Deployed strategic warheads were capped at 1,550 for each side, and deployed ground or submarine launched missiles and bomber planes were limited to 700. Each side was also permitted to conduct on-site inspections of the others' facilities on short notice to ensure compliance. With no new agreement in the works, New Start's expiration has raised concerns among some experts

that the lapse could lead to renewed nuclear proliferation during a time of heightened global conflict. And finally, here is our Have a Nice Day story. Research on animal cognition has long centered on primates, dolphins, octopuses, and elephants, with livestock seldom signaled out. But Veronica, a pet cow, living on a small farm in Austria, might be changing that. She piqued researchers' interest with her sophisticated use of tools,

a skill never observed in cattle. Over months, they observed Veronica using a broom handle to scratch the rear half of her body, manipulating the handle with her tongue and teeth. Quote, there are around 1.5 billion heads of cattle in the world, and humans have lived with them for at least 10,000 years. It's shocking that we're only discovering this now. Antonio J. Asuna Muscaro, a researcher at Vienna's University of Veterinary Medicine, who studied Veronica's behavior, said,

Scientific American has the story and videos of Veronica, and we will drop the link to it in today's show notes. All righty, well, thanks for hanging out with me today as we dove into the Fed Chair Pick and all of the other stories that we covered. We will be back tomorrow with another episode. Until then, have a great day. And also, peace.

Our executive editor and founder is me. Isaac Saul and our executive producer is John Wohl. Today's episode was edited and engineered by Dewey Thomas. Our editorial staff is led by managing editor Ari Weitzman with senior editor Will Kayback and associate editor's Audrey Moorhead, Lindsay Canuth, and Bailey Saul. Music for the podcast was produced by Diet 75. To learn more about Tangle and to sign up for a membership, please visit our website at Reut.

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