President Donald Trump’s choice as the next Fed Chair is uniquely positioned to overhaul the Federal Reserve.
That’s according to IBM Vice Chair Gary Cohn, who pointed to Kevin Warsh’s hands-on role during the 2008 financial crisis and his plans to return the central bank to traditional monetary and regulatory norms.
Cohn was responding to questions about Warsh during an appearance on CBS’ “Face the Nation,” where host Margaret Brennan asked him about Trump’s pick to lead the Federal Reserve.
Warsh will replace current Fed Chair Jerome Powell, whose term ends in May.
Powell was appointed by Trump during his first term in 2018 and later reappointed by former President Joe Biden. His term as chair ends in May. Powell has withstood continuous political pressure from Trump since he started his second presidential term.
Cohn worked closely with Warsh during the 2008 financial crisis while at Goldman Sachs. He said Warsh, a former Fed governor, understands how markets respond under stress. He said that Warsh is prepared to roll back unconventional policies, including a bloated balance sheet, while focusing the Fed on its core economic mission.
“I think we’re very fortunate to have Kevin to be the nominee,” Cohn said in the interview. “Kevin has a unique background coming in as the chair.”
Warsh Instrumental During 2008 Crisis
Cohn pointed to Warsh’s time at the Federal Reserve during the financial crisis and said Warsh was “instrumental” during the period.
“What I mean by that is when banks were going through stress, and we saw a lot of bank mergers, we saw a lot of assets being moved around the system, Kevin was the point person at the Fed,” Cohn said. “He was involved in every one of those discussions.”
“I truly believe without Kevin’s expertise, and without Kevin being there, we would not have come out of the 2008 crisis as well as we have,” he said. “So, he’s very highly qualified.”
Cohn said he was confident that Warsh would steer the Fed back toward its traditional role, including focusing on monetary policy rather than non-financial issues.
“There’s a pressure right now for interest rates to go lower. I think that he will probably follow through on the one to two cuts this year,” Cohn said in the interview. “Kevin also has a view that the Fed should not have the large balance sheet. You know, the Fed went in and bought enormous amounts of securities… I think that Kevin will reverse that.”
Still Needs Senate Confirmation
Cohn also said that Warsh is a traditionalist who supports strong regulation that allows markets to grow while ensuring consumers have access to capital.
“I think he is actually the right choice in this period of time,” Cohn said.
Warsh still must be confirmed by the Senate before taking over one of the most powerful positions in U.S. economic policymaking.
Before serving at the Fed, Warsh worked in the private sector at Morgan Stanley and later served in President George W. Bush’s administration, building a reputation in Republican economic policy circles, according to Fox Business.
Bush nominated him to the Fed’s Board of Governors in 2006, making him the youngest Fed governor in history at age 35.
Since leaving the Fed in 2011, Warsh has held academic and advisory roles, including serving as a Shepard Family Distinguished Visiting Fellow in Economics at the Hoover Institution and a visiting scholar at Stanford University’s Graduate School of Business.
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