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Here’s Donald Trump’s Shortlist for the Next Federal Reserve Chair (So Far)

President Donald Trump has interviewed four people for the post of Chair of the Federal Reserve. A nomination could come within weeks as the term of current Chair Janet Yellen ends in February 2018.

He faces a choice between two continuity candidates, current Chair Janet Yellen and Governor Jerome Powell, and two outsiders, Gary Cohn, currently his top economic advisor, and former Fed Governor Kevin Warsh.

Here are short profiles of the candidates:

Gary Cohn, 57, Director of the National Economic Council

Experience: Longtime Goldman Sachs employee and president and chief operating officer of the Wall Street bank from 2006 to 2017.

Education: Bachelor’s degree in business, American University

Policy positions: Cohn’s current job as director of the NEC has given him little reason to comment on monetary policy, but he has worried in the past that the Fed has been “constrained” by the actions of other central banks trying to keep their currencies weak.

In his own words: “If we woke up tomorrow and every central bank in the world raised their interest rates by (3 percent), the world would be a much better place.”

Pros to candidacy:

  • A practitioner’s understanding of financial markets at a time the Fed is attempting to unwind its bond portfolio bought after the 2008 financial crisis
  • The trust of the White House and many congressional Republicans given Cohn’s high profile role in the Trump administration

Cons to candidacy:

  • No formal economics background at a time that the Fed leans ever more on econometric models to decipher mixed signals in inflation and employment data
  • A decades-long career at Goldman Sachs and a personal fortune worth at least $260 million, which could raise eyebrows when it comes to confirmation by the Senate, where members on both sides see the investment bank as a symbol of financial industry excess
  • Criticism of Trump in the wake of Charlottesville, Virginia, protests

Jerome Powell, 64, Federal Reserve Governor

Experience: Lawyer and investment banker; partner in private equity firm Carlyle Group from 1997-2005; Senior Treasury official under George H.W. Bush; Fed Governor since 2012 (appointed by President Obama)

Education: Bachelor’s degree in politics, Princeton University; Law degree from Georgetown University

Policy positions: Powell has never dissented while at the Fed, and in line with Yellen supports slowly raising interest rates as long as the economy continues growing and inflation is expected to rise. He advocates easing some aspects of the Dodd-Frank regulations and has discussed ways to revise the Volcker Rule.

In his own words: “The Committee has been patient in raising rates, and that patience has paid dividends … I would view it as appropriate to continue to gradually raise rates.”

Pros to candidacy:

  • An uncontroversial pick for the position, could be the compromise who both replaces Yellen and provides continuity
  • Only Republican currently on the Board of Governors, has already helped guide the economy in its recovery and would likely get bipartisan support in Congress
  • Familiarity with markets and financial regulation may be considered a plus

Cons to candidacy:

  • As a current Fed member identified with the more centrist wing of the Republican Party, may not provide enough of a change if Trump decides to replace Yellen
  • Expertise is less in formal economics and more in markets and financial regulation, which may seem too much of an overlap with the incoming vice chair for supervision, Randal Quarles

Kevin Warsh, 47, Visiting Fellow at Stanford University’s Hoover Institution

Experience: Fed governor from 2006 to 2011; economic adviser to President George W. Bush from 2002 to 2006; M&A lawyer at Morgan Stanley for seven years

Education: Bachelor’s degree in public policy, Stanford University; Law degree from Harvard University

Policy positions: Warsh feels the Fed should not try to fine tune the economy and argues policymakers have too much discretion. He feels the Fed should aim for inflation between 1 percent and 2 percent, effectively lowering its inflation target.

In his own words: “We should not accept the Fed’s newfound conviction that a very low neutral equilibrium real short-term interest rate (r*) is a fixed feature of future monetary policy … The central bank and the academic community should engage in a fundamental rethinking of the Fed’s strategy, tools, governance, and communications.”

Pros to candidacy:

  • Former banker and for several years former Fed Chair Ben Bernanke’s right-hand man on financial markets, has a familiarity with Wall Street
  • Wife Jane Lauder Warsh is a daughter of cosmetics magnate Ron Lauder, a longtime friend of Trump
  • Served on the president’s economic advisory council before it disbanded

Cons to candidacy:

  • May be seen as too hawkish by a president who calls himself a “low interest rate person”
  • Not an academic economist like Yellen or Bernanke but has still maintained U.S. monetary policy needs a full makeover
  • Worried about inflation even as the 2008 financial crisis hit, and quit the Fed over its second round of bond-buying, a possible black mark against his judgment given the success of the “quantitative easing” program
  • Even while quitting over Fed bond buying, never dissented on FOMC decisions

Janet Yellen, 71, Federal Reserve Chair

Experience: Also served as a Fed governor, President of the San Francisco Fed, and the Fed’s vice chair from 2010 to 2014

Education: Phd in economics, Yale University

Policy positions: Yellen steered the Fed towards “gradual” rate increases and a slow reduction of its balance sheet, dependent on evidence of a continued economic recovery. She argues that post-crisis financial regulation has made the economy more stable without sacrificing growth.

In her own words: “My colleagues and I may have misjudged the strength of the labor market … or even the fundamental forces driving inflation … How should policy be formulated in the face of such significant uncertainties? In my view, it strengthens the case for a gradual pace of adjustments.”

Pros to candidacy:

  • After a career in the Fed system and four years as its head, has earned the trust of markets and shown she can shift policy without major disruption
  • A growing economy, low unemployment, and strong stock markets make the case for continuity, while Trump has said publicly he feels she is doing a good job

Cons to candidacy:

  • Could be seen as a Democratic holdover by a President who may want to put his own stamp on the Fed
  • Feels the core regulations approved after the financial crisis should remain intact, a possible friction with the administration’s deregulatory bent
  • Some Republican leaders want the Fed to have less discretion over monetary policy, an idea Yellen resists