by Bryan Perry
January 21, 2026
As of last week, Kevin Warsh emerged as the front-runner to succeed Jerome Powell as Chairman of the Federal Reserve in May. His potential selection is a significant point of discussion for financial markets due to his unique blend of Wall Street experience and hawkish economic views.
Warsh was appointed to the Federal Reserve Board of Governors by President George W. Bush 20-years ago and was sworn in on February 24, 2006, at the age of 35, making him the youngest person appointed to the Board of Governors in the 112-year history of the Federal Reserve. Bush nominated him on January 27, 2006, to fill the unexpired term previously held by Ben Bernanke, who had just become Fed Chair.
At the time, his appointment was controversial due to his age and perceived lack of experience compared to typical Fed governors. However, he became a central figure during the 2008 financial crisis, serving as the Fed’s primary liaison to Wall Street and a key advisor to Chairman Bernanke. While appointed by Bush, Warsh continued to serve into the Barack Obama administration before resigning in March 2011.
Warsh’s leadership experience during the 2007-2009 financial crisis provides the best clues for how he might lead the Federal Reserve in 2026 and beyond. While only in his late thirties during the 2008 crisis, Warsh held an outsized influence then, surpassing many of his more senior colleagues on the Board.
Prior to his public service, he was an Executive Director at Morgan Stanley in Mergers and Acquisitions. Because of his background there, he was the Fed’s primary point-man with the CEOs of major investment banks. When the system began to freeze in 2008, Warsh was the person on the phone with terrified bank executives, translating the chaos of the trading floor for the academic-oriented economists at the Fed.
Warsh was a key architect in the forced take-overs and bailouts of 2008. He helped negotiate JPMorgan’s acquisition of Bear Stearns and was a central figure in the discussions surrounding the AIG bailout and the fateful decision to let Lehman Brothers fail. He spent a significant amount of time on Capitol Hill, selling the Fed’s emergency measures to skeptical Republicans, wary of government intervention.
Although he initially supported the emergency measures (like cutting rates to zero), Warsh eventually became one of the first and most vocal critics of the Fed’s long-term reliance on easy money. In 2010, he publicly broke with Ben Bernanke in a Wall Street Journal op-ed, questioning QE2, the second round of Quantitative Easing. He worried over printing money leading to inflation and “market distortions.”
Warsh famously referred to Quantitative Easing as a “reverse Robin Hood” policy, as it benefited wealthy asset holders (stock and real estate owners) while doing little for the average Main Street worker. He resigned from the Fed in 2011, seven-years before his term was to expire, historically, Warsh is known as an inflation hawk, famously stating, “Inflation is a choice,” since price levels are driven by decisions of fiscal and monetary authorities rather than just external shocks. While traditionally hawkish, he recently expressed support for interest rate-cuts combined with aggressive balance sheet reduction (quantitative tightening). This “rate-cuts + QT” approach is a pragmatic compromise aligned with current political desires for lower rates while maintaining price stability.
If Warsh is confirmed as Chair this May, his past suggests a strategic reset. He has recently argued the Fed has “strayed from its remit.” He would likely prioritize shrinking the Fed’s balance sheet more aggressively. He prefers using market signals (like bond yields and commodity prices) to guide interest rates rather than relying solely on the Fed’s economic models, which often fail to predict inflation.
Warsh has proposed a strategy called Pragmatic Monetarism to help manage this burden. His plan focuses on a dual-track approach, of shrinking the Fed’s own balance sheet to lower the cost of the debt, rather than just the debt. Unlike some who want to raise the inflation target to 3%, Warsh remains a staunch advocate for a strict 2% (or lower) target, viewing price stability as the North Star for a healthy economy.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Warsh argues the Fed has practiced “fiscal dominance” in the last 15-years, by essentially keeping interest rates artificially low to make it easier for the government to borrow trillions. He wants to end the recent “printing press era.” He believes stopping the Fed’s massive purchase of government bonds can force a clearer separation between the Treasury (which spends) and the Fed (which manages money).
This is his most distinctive proposal. He says the Fed’s $7-trillion balance sheet is actually keeping interest rates higher than they need to be. He argues the policy of the Fed aggressively selling off its assets in the form of quantitative tightening “quiets the printing press.” Warsh further believes a smaller, more disciplined Fed balance sheet reduces inflation expectations so effectively the Fed can then lower interest rates for households and businesses without causing inflation to spike. Lower interest rates, in turn, can reduce the interest expense the government has to pay on its $38-trillion in red ink.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Warsh’s current activities include serving as the Shepard Family Distinguished Visiting Fellow in Economics at Stanford University’s Hoover Institution. He is also a lecturer and Dean’s Visiting Scholar, where he teaches and conducts research on economics and finance. He is on the Board of Directors of major firms, a partner at Duquesne Family Office, working alongside billionaire Stanley Druckenmiller. He is also a member of the Group of Thirty (G30), an international body of leading financiers and academics, and serves on the Panel of Economic Advisers for the Congressional Budget Office (CBO).
Based on his broad experience in financial crisis management, his understanding of Wall Street, his communication skills, as demonstrated on Capitol Hill, and his passion to reign in the $38-trillion debt and drive inflation lower, this puts Kevin Warsh squarely in the spotlight to be the next Fed Chairman.
Navellier & Associates; own JPMorgan Chase & Co. (JPM), in some managed accounts. Bryan Perry does not personally own JPMorgan Chase & Co. (JPM).
All content above represents the opinion of Bryan Perry of Navellier & Associates, Inc.
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Bryan Perry
SENIOR DIRECTOR
Bryan Perry is a Senior Director with Navellier Private Client Group, advising and facilitating high net worth investors in the pursuit of their financial goals.
Bryan’s financial services career spanning the past three decades includes over 20-years of wealth management experience with Wall Street firms that include Bear Stearns, Lehman Brothers and Paine Webber, working with both retail and institutional clients. Bryan earned a B.A. in Political Science from Virginia Polytechnic Institute & State University and currently holds a Series 65 license. All content of “Income Mail” represents the opinion of Bryan Perry
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