Kevin M. Warsh is a financier and former Federal Reserve governor (Board of Governors, Feb. 24, 2006–March 31, 2011). He served as the Fed’s representative to the G‑20 and as Administrative Governor; earlier he was Special Assistant to President George W. Bush for economic policy and Executive Secretary of the National Economic Council (2002–2006). In the private sector he worked in Morgan Stanley’s M&A group (vice president/executive director) and has held roles at the Hoover Institution, Duquesne Family Office, and corporate boards (e.g., UPS, Coupang). He holds an A.B. from Stanford and a J.D. from Harvard Law School.
The Fed Chair is the public spokesperson and executive officer of the Board of Governors, presides at Board meetings, represents the Fed to Congress and abroad, and chairs the Federal Open Market Committee (FOMC) which sets U.S. monetary policy. The Fed’s statutory “dual mandate” (1977 amendment to the Federal Reserve Act) directs the Fed to promote maximum employment and stable prices (and Congress also cites moderate long‑term interest rates). The Chair helps set policy tools (open‑market operations, the discount rate, reserve requirements) to meet those goals.
The president nominates a Fed Chair; the Senate must confirm the nominee. The nomination is first reviewed by the Senate Committee on Banking, Housing, and Urban Affairs (the Senate Banking Committee), which holds hearings, votes to report the nomination to the full Senate, and then the full Senate debates and votes—confirmation requires a majority vote.
Federal Reserve independence means the Fed has legal authority to set monetary policy without direction from the President or Congress, supported by long, staggered terms for governors and design features to insulate decisions from short‑term politics. Presidents and Congress can still influence the Fed via appointments (nominating/reappointing governors and the Chair), oversight and hearings, statutory changes to the Fed’s mandate or powers, and budgetary/legislative tools—but they cannot lawfully direct day‑to‑day monetary policy decisions.
Reducing the Fed’s “balance sheet” means shrinking the Federal Reserve’s holdings of securities and other assets acquired during crisis programs (e.g., Treasury and mortgage‑backed securities). The Fed reduces the balance sheet by letting securities mature without reinvestment or by active sales. Supporters favor it to normalize monetary policy, reduce the Fed’s market footprint, and limit risks to financial stability and future inflation pressures, though steps are taken gradually to avoid market disruption.
Fed ethics rules require recusal from particular matters that would directly and predictably affect the financial interests of a former employer or company where the official served on the board; nominees also must file public financial disclosures and comply with federal ethics laws (e.g., conflict‑of‑interest prohibitions). The Fed’s ethics office enforces Gifts/Conflicts rules and can require divestiture, blind trusts, or recusal from specific matters. Details are reviewed in confirmation and enforced under federal ethics statutes and Fed policies.
A new Fed Chair influences interest rates and markets mainly by setting the policy stance and guidance: leading the FOMC’s decisions on the federal funds rate and communicating policy outlook (forward guidance). Short‑term effects arise from FOMC rate changes, changes in balance‑sheet policy, and the Chair’s public statements—these affect market expectations, bond yields, bank lending costs, and inflation expectations. Markets react quickly to signals about rate paths and credibility on inflation.
The Federal Open Market Committee (FOMC) is the Fed body that sets U.S. monetary policy; it has 12 members (7 Board governors, the New York Fed president, and four rotating Reserve Bank presidents). The Chair presides over the FOMC, sets meeting agendas, leads policy discussions, and works to build consensus among voting members; the Chair’s views are highly influential but policy is decided by FOMC votes.