As Powell Steps Down, the Fed Confronts ‘Regime Change’

Kevin M. Warsh’s campaign to become the next chair of the Federal Reserve centered on the premise that the central bank had lost its way.

The Fed had made a major policy blunder in the aftermath of the Covid-19 pandemic that helped to induce the worst inflation shock in four decades. It had intervened in financial markets to such a degree that it distorted the fundamental way in which assets across the world were priced. And, Mr. Warsh argued, the Fed had jeopardized its own political independence by engaging in issues outside of its congressional mandate.

Mr. Warsh’s solution was to call for “regime change” across an institution that had become a magnet for attacks from President Trump over its refusal to slash interest rates.

The pitch worked for Mr. Trump. It also swayed Senate Republicans, who confirmed Mr. Warsh for the top job just days before Jerome H. Powell’s term officially ended on Friday. Mr. Powell will serve on a temporary basis until Mr. Warsh is sworn in. After that point, Mr. Powell will remain as one of seven members of the Board of Governors, a decision he made to ward off further encroachments on the Fed.

Article source: https://www.nytimes.com/2026/05/15/us/politics/jerome-powell-kevin-warsh-federal-reserve.html