‘We are still dealing with the legacy of the policy errors in 2021 and 2022,’ Warsh told the Senate Banking Committee.
Kevin Warsh, President Donald Trump’s nominee to replace Jerome Powell as chair of the Federal Reserve, called for a “regime change” at the central bank.
Appearing at his April 21 confirmation hearing, Warsh reaffirmed the importance of Fed independence, but touted reforms to restore the century-old institution’s credibility.
“Once you let inflation take hold in the economy, it’s more expensive and harder to bring it down, and so the fatal policy error going back four or five years is still a legacy that we’re dealing with,” Warsh told the Senate Banking Committee.
“I think that means a regime change in the conduct of policy. I think that means a different, new inflation framework.”
He pointed to the Fed’s various policy missteps, particularly during the coronavirus pandemic.
“After COVID, when prices went up to the tune of 25–35 percent for virtually all deciles of the American people, that’s an indication that the Fed missed its mark,” he said.
“We are still dealing with the legacy of the policy errors in 2021 and 2022.”
Sens. Elizabeth Warren (D-Mass.) and Jack Reed (D-R.I.) focused on testing Warsh’s independence, expressing concern that he could be a “sock puppet” for the administration.
Warren asked Warsh if there is anything about Trump’s economic agenda that he disagrees with.
“I do have a disagreement,” Warsh joked. “I think even this morning,[Trump] said that he thought I was out of central casting. I think central casting, I’d look older, grayer, maybe show up here with a cigar of sorts.”
Officials also focused on the Fed nominee’s financial holdings in their questions.
The former Fed governor disclosed last week that he has more than $100 million in assets.
Despite working with the Office of Government Ethics and agreeing to divest his holdings upon confirmation, Democratic senators pushed back, questioning potential conflicts of interest.
Warsh stated that he has disclosed all of the necessary information.
“I agreed to divest virtually all of my financial assets, a large majority of which will be divested before I raised my right hand and sworn into office by this body,” he said.
Sen. Thom Tillis (R-N.C.) clarified that he checked with staff and that Warsh would be “in compliance if he executes the agreement.”
By Andrew Moran
