The Senate Banking Committee split 13-11 along party lines to advance Kevin Warsh’s nomination as Federal Reserve chair. First time that’s happened in the panel’s history. Sen. Elizabeth Warren called it out directly, pinning the blame on President Trump’s assault on central bank neutrality, as detailed in Fortune.
Claudia Sahm, former Fed economist and creator of the Sahm recession indicator, didn’t mince words. “This is not normal is going to be a theme,” she told Fortune. And it might define Warsh’s entire tenure. Sahm worked at the Fed during Warsh’s stint as governor from 2006 to 2011. She doesn’t know him personally. But she’s alarmed.
Hours before the vote, Jerome Powell led his likely final meeting as chair. Rates held steady at 3.5% to 3.75%. Four dissents exposed deep rifts. Stephen Miran pushed for a cut. Beth Hammack, Neel Kashkari, and Lorie Logan wanted no easing bias at all. Inflation hit 3.3% in March, highest in two years. Blame an energy shock from the U.S.-Israeli war with Iran. Oil surged 50% since late February. Brent crude topped $118 a barrel. Tariffs added pressure too. Skanda Amarnath of Employ America noted, “The facts have moved decisively in the hawkish direction.” Warsh inherits that mess, per Fortune.
Trump demands rates as low as 1%. Warsh floated preemptive cuts for AI-driven disinflation. Sahm shot that down. “I think it’s completely off the table.” No FOMC votes to back it. Data doesn’t support it. “He doesn’t have the chops to make that argument persuasively on day one.”
Powell isn’t vanishing. He plans to stay on the board until 2028. First chair to do so since 1948. Cites Trump’s legal attacks, including a dropped DOJ probe into Powell that cleared Warsh’s path. “The things that have happened really in the last three months have left me no choice,” Powell said at his press conference, according to Wall Street Journal. Trump mocked it. Called Powell a “negative force” who can’t find work elsewhere. But his priority is confirming Warsh.
Sahm rips Warsh’s hearing performance. Jokey deflections to Sens. Warren and Raphael Warnock on the 2020 election and Trump’s economy grade. “His jokey replies… were a disrespect I have never seen a Fed Chair show in testimony.” Fed leaders defer to Congress. Warsh didn’t. Amarnath agrees. Warsh could have built bridges with sober questions from Sens. Chris Van Hollen, Warnock, Catherine Cortez Masto. He smirked instead. “The Fed is a creature of Congress.” Now it enters a partisan cloud. Crises ahead? Legitimacy at risk.
Warsh’s ideas worry her more. His framework? “Word salad. Like he makes my head hurt.” High-level abstractions. Back in 2008, as panic gripped markets, he said, “The Panic began before the recession and will assuredly end before it.” Post-2011, he bashed Fed conformity. “The clustering of economic forecasts reveals conformity of views inside the Fed.” Data dependence? Erratic lurches. Models like Ptolemaic astronomy. At the hearing, he promised regime change. Ditch forward guidance. Scrap the dot plot. End Powell’s pressers.
Sahm sees gaps. In a Bloomberg Opinion piece, she flags Warsh’s silence on maximum employment. Dual mandate since 1977: price stability and jobs. Chairs like Paul Volcker prioritized inflation. “We will not be successful… unless we take care of the inflation side.” But the Fed evolved. Rigorous employment tools now. U.S. hires rate at 3.1% in February 2026, pandemic low. Warsh nods to the mandate. Ignores half.
Sen. Thom Tillis praised Warsh as “outstanding.” His hold? Trump’s DOJ probe on Powell. Dropped to free the path. Sets precedent. Sahm doubts the pressure stops. “This pressure campaign from the White House on the Fed—I cannot believe it ends with Warsh becoming Fed chair.” Trump wants cuts. Warsh might face the heat.
Powell vows a low profile. No shadow chair. But his presence brackets Trump fights for Warsh, as CNBC analyzes. Senate Majority Leader John Thune filed cloture. Full vote soon. Warsh likely confirmed by May 15. Markets eye volatility. Stronger dollar. Higher yields. Hawkish tilt.
And the FOMC? Three regional presidents signal no quick cuts. Powell watches from the boardroom. Warsh steps into fracture. History judges harshly. Independence battered. Normal? Not anymore.
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