President Donald Trump continued to flood the zone with horrific news Friday, this time by nominating a hack who got literally everything wrong during the 2008 financial crisis to serve as Federal Reserve chair.
Trump chose Kevin Warsh, a member of the Federal Reserve Board from 2006 through 2011 when the U.S. economy nearly collapsed, to replace Jerome Powell, whose term expires in May.
“I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best. On top of everything else, he is 'central casting,' and he will never let you down,” Trump wrote on Truth Social.
Federal Reserve Chair Jerome Powell, who has been a target of President Donald Trump’s since he’s refused to bend the knee.
Despite having nominated Powell, Trump later turned on him because he wasn’t willing to bow to Trump’s whim. In fact, Trump has crowed about firing Powell—a move that spooked financial markets—but is now trying to scare Powell into resigning by launching a corrupt criminal probe.
It goes without saying that anyone Trump picks to replace Powell is likely going to be a sycophant who will do whatever Trump wants.
Indeed, Warsh has close ties to Trump.
Warsh’s father-in-law is Ron Lauder, the heir to the Estée Lauder fortune who has donated millions to Trump’s political endeavors and is partly behind Trump’s idiotic and unpopular quest to conquer Greenland. It’s a major conflict of interest, as Lauder would surely be a conduit for Trump if Warsh is ultimately confirmed to the role.
On top of that, Warsh is also an idiot who was comically wrong about literally everything during the 2008 financial crisis that almost took down the entire U.S. economy.
As unregulated banks issued predatory and risky loans that would ultimately cause multiple major financial institutions to crumble, Warsh was instead crowing about nonexistent inflation. And once shit hit the fan and unemployment spiked to a whopping and horrific 10%, Warsh argued against lowering interest rates to help spur businesses.
Economic experts brought this up back in 2017, when Warsh was on Trump's short list to lead the Fed before he ultimately chose Powell.
Take this from the Washington Post at the time:
His [Warsh’s] specialty was seeing inflation problems that didn't exist. He warned about inflation in 2006 when, excluding volatile food and energy prices, it was just 2.1 percent. Then he did in 2007 when it was 2 percent by the same measure. And again in 2008 when core prices were rising a relatively nonthreatening 2.3 percent, going so far as to say that he was “still not ready to relinquish my concerns on the inflation front” the day after Lehman Brothers failed.
What Warsh wasn't worried about, though, were all the risks banks had been taking that would ultimately require them to be bailed out. A few months before the credit crunch began in 2007, Warsh even said that “an important source of strength has been financial innovation,” highlighting the purported benefits of credit default swaps and other derivatives that Warren Buffett would go on to call “financial weapons of mass destruction.” This was supposed to be Warsh's area of expertise."
It’s why Democrats immediately came out against Warsh’s nomination.
“Trump chose Kevin Warsh for Fed Chair because his father-in-law is a billionaire donor, the brains behind Trump’s idiotic scheme to invade Greenland. He also chose him because Warsh has shown willingness to wildly alter his views on monetary policy based on who is in the White House, and because he is ‘out of central casting,’” Democratic Rep. Don Beyer of Virginia wrote on X.
He continued, “The Senate should note these bad qualifications and remember Warsh’s awful track record at the Fed during the 2008 financial crisis and Great Recession. These concerns along with Trump’s attacks on the Fed mean this nominee must face hard questions about independence and monetary policy. Warsh can’t just get a rubber stamp.”
A cartoon by Jack Ohman.
But at the moment, Warsh is unable to clear the nomination process, as Republican Sen. Thom Tillis of North Carolina said that he’s placed a hold on all of Trump's Fed nominees until he drops his politically motivated criminal investigation into Powell.
"Kevin Warsh is a qualified nominee with a deep understanding of monetary policy. However, the Department of Justice continues to pursue a criminal investigation into Chairman Jerome Powell based on committee testimony that no reasonable person could construe as possessing criminal intent," Tillis wrote on X. "Protecting the independence of the Federal Reserve from political interference or legal intimidation is non-negotiable."
He added, "My position has not changed: I will oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman, until the DOJ’s inquiry into Chairman Powell is fully and transparently resolved."
But if Tillis drops that hold, lord help us all.
