Financial Man's Promotion Ceiling: Trump Appoints Former Morgan Stanley Banker to Lead the Federal Reserve

Core Viewpoint

Trump Officially Nominates New Fed Chair, Shaking the Financial World

On Friday morning, Eastern Time, President Trump officially nominated Kevin Warsh as the new chair of the Federal Reserve, succeeding Powell. This decision ended a five-month battle for the Fed's leadership and thrust this veteran, who has deep ties to both the Fed and Wall Street, into the spotlight.

After the announcement, Trump expressed his support for Warsh on Truth Social: "I have known Kevin for a long time and have no doubt he will be one of the greatest Fed chairs in history, without exception."

cr. truthsocial

At 56 years old, Kevin Warsh was once considered by Trump in 2017 for the Fed chair position. However, he lost to Powell, and after seeing Powell raise interest rates, Trump began to regret not choosing Warsh.

Looking back at the past of this new Fed leader, he earned a Bachelor’s degree in Public Policy from Stanford University, majoring in Economics and Political Science; he then attended Harvard Law School, graduating with a JD in 1995 with honors; he also studied market economics and debt capital markets at MIT Sloan School of Management and Harvard Business School.

Warsh began his career at Morgan Stanley in mergers and acquisitions, rising to executive director of the M&A department. He was nominated to the Fed by George W. Bush in 2006, becoming the youngest appointee in the Fed's history at just 35 years old.

During the 2008 financial crisis, he became a "key liaison" between the Fed and Wall Street due to his connections. It’s worth noting that Warsh's rise was partly due to his personal excellence and partly due to his marriage. Warsh's wife is a Stanford alumna, Jane Lauder, the granddaughter of the founder of Estée Lauder, with a net worth of about $2.6 billion, currently serving as the global brand president of Clinique. Warsh's father-in-law, Ronald Lauder, is a longtime friend and important supporter of Trump, and was the first to propose that Trump buy Greenland, providing Warsh with unique networking resources in both political and business circles.

His deep policy experience and recognition on Wall Street have led to a relatively calm market reaction to this nomination. The market generally believes that Warsh will not completely follow Trump's orders; his understanding of both policy and the market is an advantage, allowing him to balance the demands of Wall Street and the White House. His policy decisions are expected to consider both market principles and political demands. However, his "Wall Street background" has raised concerns that policies may favor financial institutions over ordinary citizens.

The conflict between Trump and Powell has long been public. Since Powell took office as Fed chair in 2018, Trump has continuously criticized his policies, and even after the Fed cut rates three times in the second half of 2025, Trump’s dissatisfaction remained unquenched. Trump even sued Powell for mismanaging the Fed, claiming he should be ousted immediately:

cr. CNBC

Warsh himself, in a CNBC interview in July 2025, openly called for a "change of guard" at the Fed. This statement also suggests that if he takes office, he may break the Fed's previous consensus-driven policy style and adopt a more aggressive reform stance.

It is noteworthy that this nomination comes at one of the most turbulent times for the Fed in decades:

Inflation has not yet fallen to the target level of 2%;
Government debt continues to rise;
The Fed's monetary policy is facing unprecedented political pressure…

Previously, the Trump administration had repeatedly proposed strengthening the White House's control over the Fed, even requiring the Fed chair to consult with the president before setting interest rates. Discussions about the Fed's independence have shifted from theoretical debates in academia to real concerns in the market and among the public.

Warsh's path to taking office will not be smooth. Republican Senator Thom Tillis has explicitly stated that he will block all Fed nominee votes until the Department of Justice completes its investigation into the Fed.

In addition to political obstacles, Warsh will also face severe economic challenges: high inflation, a labor market stuck in a "no layoffs and no hiring" stagnation, making policy formulation quite difficult.

How the market will specifically react remains to be seen.

That said, this "battle" for the Fed chair once attracted 11 candidates, including former Fed officials, renowned economists, and Wall Street moguls. After a screening led by Treasury Secretary Scott Bessent, the candidate list was gradually narrowed down to five, then four. Here are some of the most popular candidates: Kevin Hassett, from 80% support to 1% By the end of 2025, Kevin Hassett was almost universally recognized as the top candidate for the next Fed chair, with his odds exceeding 80% on prediction platforms, but by January 29, 2026, his nomination probability had plummeted to 1%, completely dropping out of the core competition. For decades, Kevin Hassett has been a regular in Washington and Wall Street. Hassett was born in 1962 in Greenfield, earned a Bachelor’s degree in Economics from Swarthmore College, and later received a Ph.D. in Economics from the University of Pennsylvania. He served as an assistant and associate professor at Columbia Business School.

In the 1990s, Hassett worked as an economist in the Fed's Research and Statistics Division, and later spent several years at the conservative think tank American Enterprise Institute (AEI), focusing on tax policy, fiscal issues, and stock market research. He co-authored "Dow 36,000," a book predicting that U.S. stocks were undervalued. Hassett served as the chair of the White House Council of Economic Advisers from 2017 to 2019 and returned to the White House this January as the director of the National Economic Council, becoming Trump's top economic policy advisor and a key figure in formulating tariff strategies, tax policies, and government inflation information. cr. WSJ

Hassett has always been a loyal supporter of Trump, and one reason Trump values him is their complete alignment on "interest rate cuts." He echoed Trump's views, sharply criticizing the Fed and Powell for being too slow in cutting rates, even publicly confirming that the White House was exploring whether Trump could fire Powell for some reason. Christopher Waller Christopher Waller is considered an insider at the Fed, having been nominated by Trump in 2019 and is now a Fed governor.

Waller holds a Bachelor’s degree in Economics from Bemidji State University and later earned a Master’s and Ph.D. from Washington State University. He joined the St. Louis Federal Reserve Bank in 2009 as the research director and also served as the executive vice president of the bank.

Last July, he and Bowman opposed the Fed's decision to "not cut rates," marking the first instance of a dual opposition in over 30 years, highlighting his firm stance on rate cuts. However, compared to Hassett, Waller has a much lighter political color and leans more towards being a technocrat. Rick Rieder Rick Rieder is the "Wall Street heavyweight" among the candidates: the global chief investment officer of fixed income at asset management giant BlackRock. Rieder is responsible for approximately $2.4 trillion in assets at BlackRock, which is equivalent to holding half of the Fed's "money bag." cr. BlackRock Rieder holds a Bachelor’s degree in Finance from Emory University and later earned an MBA from the Wharton School of the University of Pennsylvania. He previously worked at Lehman Brothers as the head of the global proprietary trading platform's global proprietary strategy team. Before joining BlackRock in 2009, Rieder served as president and CEO of R3 Capital Partners. Michelle Bowman Michelle Bowman was appointed to the Fed by Trump in 2018 and has been nominated by Trump this year to serve as the vice chair for supervision at the Fed, making her a "tough player" within the Fed.

Bowman's background is also interesting: her family owns one of the oldest banks in Kansas—Farmers & Drovers Bank. She also has her own public affairs and consulting firm, the Bowman Group, in London. In politics, Bowman started as an intern for Senator Dole and later served as legal counsel for the House Transportation and Infrastructure Committee and the Government Reform and Oversight Committee.

Her core viewpoint is that the Fed has fallen behind the curve, and rate cuts must be decisive, even faster and more substantial. This strong stance on rate cuts aligns closely with Trump's demands. Additionally, Trump has often expressed a desire for current Treasury Secretary Scott Bessent to serve as chair, but Bessent has repeatedly declined.

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