Kevin Warsh’s Fed Job Gambit: How His Rate Cut Reversal Targets Trump’s Favor
Wall Street's latest power play just got spicy—former Fed insider Kevin Warsh is flipping his rate-cut stance like a political mercenary. Is this a masterstroke or pure opportunism?
Subheader: The Flip-Flop Heard 'Round the Marriner Eccles Building
Warsh—once a hawkish darling—now courts Trump with dovish whispers. Because nothing says 'hire me' like rewriting your monetary policy legacy overnight.
Subheader: The Unwritten Rule of DC Economics
Want a top finance gig? Just mirror the boss's latest tweet. Gold medals in gymnastics go to... central bankers?
Closing jab: If flip-flops were a tradable asset, DC would've crashed the futures market by now.
Kevin once resisted cuts
During his time as Fed governor from 2006 to 2011, Kevin opposed rate cuts even when the financial system was falling apart. He repeatedly warned of inflation that never came. In May 2008, just two months after Bear Stearns collapsed and the Fed had already slashed rates by 3%, Kevin was still pushing back, saying further reductions could fuel inflation.
Four months later, Lehman Brothers triggered global panic. The Fed dropped rates to zero. Kevin went along, but by September 2009, with inflation in negative territory and unemployment close to 10%, he warned the Fed might need to hike rates with “greater force” than before. The Fed didn’t raise rates again until 2015, and inflation during that stretch stayed around 1.5%.
Kevin left the Fed in 2011, soon after then-chair Ben Bernanke launched a second wave of bond-buying. Kevin hated the idea of quantitative easing outside a crisis. Now he wants the Fed to unwind that balance sheet while also cutting rates — something even his past self would’ve rejected outright. And while inflation is still hovering above the Fed’s 2% target, Kevin’s pushing rate cuts anyway.
He isn’t just aiming to change policy, though; this guy wants to clean house. “I think what we need is regime change at the Fed,” he said, making it clear he’s not just targeting Powell. He wants to replace multiple officials. He believes the Fed’s poor response to pandemic-era inflation, along with its refusal to admit policy failures, has wrecked its credibility.
Trump wants a rate cutter and Kevin wants the job
Trump has been loud about needing someone who’ll lower rates, and he’s said flat out that if a candidate won’t commit to that, they’re out. “If I think somebody’s going to keep the rates where they are or whatever, I’m not going to put them in,” he told reporters on June 27. Kevin’s very public reversal looks like a job application. And he’s not trying to hide it.
This wouldn’t be his first shot. Kevin was close to landing the job in 2017, when Trump ended up choosing Powell instead. Trump later said he regretted that decision. In 2020, he told Kevin, “Kevin, I could have used you a little bit here. Why weren’t you more forceful when you wanted that job?”
This time, Kevin’s making sure he’s being heard.
Other contenders include Scott Bessent, Kevin Hassett, and Christopher Waller — all of whom support cutting rates. But Kevin’s got something they don’t. He was with the central bank during the 2008 crisis. When banks were collapsing and everyone was panicking, Kevin helped push the sale of Wachovia to Wells Fargo, and he helped design a plan to push billions in capital into the nine biggest U.S. banks. That hands-on experience gives him a strong edge.
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