President Donald Trump has announced his plan to nominate Kevin Warsh as the next Federal Reserve chairman, a move that could shift monetary policy and reshape how the Fed handles its balance sheet and independence once confirmed by the Senate.

Kevin Warsh, 55, is a known quantity in Washington and Wall Street circles, having served on the Fed’s Board of Governors from 2006 to 2011 and later advising President Trump. He would take the chair in May when Jerome Powell’s term ends, pending Senate approval. That timeline puts a new leader in place ahead of critical economic debates about rates and the Fed’s footprint.

Warsh’s record includes a front-row seat during the 2008 financial crisis, where he earned a reputation as a hands-on liaison between the Fed, lawmakers, and financial firms. Colleagues used to ask, “Have you run it by Warsh?” which points to the influence he wielded even as a relatively young governor. His 2011 resignation came amid tensions over another round of bond purchases, signaling early disagreement with long-term quantitative easing.

After leaving the Fed, Warsh became an outspoken critic of prolonged low interest rates and an expanding balance sheet, predicting inflationary consequences that arrived in 2022 and 2023. His 2021 warning that large asset purchases “sowed inflation seeds” looks prescient to many conservatives who opposed easy-money policies. That kind of foresight is exactly what supporters say the Fed needs now.

Warsh is pushing a clear agenda: shrink the Fed’s $6.6 trillion asset portfolio and restore normal market signals by rolling back emergency-era tools. He argues that quantitative easing and other interventions distort price discovery and create moral hazard. In plain terms, he wants the Fed to stop crowding out private investors and let the market breathe again.

He’s also talked about creating space for future rate cuts by reducing the balance sheet now, a strategy meant to give policymakers real flexibility. That stands in contrast to the slow, ad hoc approaches critics blame on the current Fed leadership. For Republicans and market-oriented conservatives, a tougher stance on inflation and a smaller balance sheet is a welcome restore of sanity.

Warsh has floated a new compact with the Treasury to clarify lines between monetary and fiscal operations, aiming to avoid the Fed becoming a backdoor financing arm for deficits. He’s skeptical of a retail digital dollar and prefers a wholesale model, signaling caution about handing the government new levers over private transactions. Those positions appeal to folks worried about federal overreach into everyday financial life.

Despite championing Fed independence in speeches—warning that governments might push “looser policy longer to finance the debt”—Warsh’s ties to Wall Street and past Republican administrations will draw scrutiny. He married into the Estée Lauder family, which some will use to paint him as part of the establishment. Even so, his critics need to reckon with his consistent warnings against politicization and easy money.

Confirmation won’t be automatic. A Department of Justice probe into the Federal Reserve, and subpoenas tied to Jerome Powell’s 2025 testimony, has shaken the confirmation landscape. Some Republican senators have sounded ready to stall new appointments until that matter is settled, which creates political friction even if they otherwise favor a nominee who pushes fiscal restraint.

The Federal Open Market Committee itself is split on how to proceed after three rate cuts in late 2025, with policy rates sitting at 3.5% to 3.75% amid inflation above the 2% goal. Warsh walks into a fractured committee where five regional presidents and seven governors must find a path forward together. His past critique of “groupthink of the guild” suggests he wants sharper debate inside the Fed, not cozy unanimity.

Supporters say Warsh’s experience during crisis years and his willingness to challenge prevailing orthodoxies could steady markets and restore credibility. Opponents will point to his Wall Street ties and worry about who benefits from any policy shifts. The real test will be whether he can build consensus while pushing a tighter, market-friendly agenda.

Whether you view him as a principled guardian of independence or a well-connected insider, Warsh brings clarity of purpose: shrink the balance sheet, resist fiscal encroachment, and normalize policy tools. That clarity is what Republican policymakers and many investors wanted after years of emergency-style monetary policy. The confirmation fight will show how much appetite there is in Washington for a different kind of Fed chair.