The Senate confirmed Kevin Warsh as the new chairman of the Federal Reserve on May 13 by a 54-45 margin. Warsh’s experience in financial markets and his approach to monetary policy have earned him support from industry trade associations.
All but one of Warsh’s “yea” votes came from Republicans, with the exception being Sen. John Fetterman (D-Pa.). Three Republicans and one Democrat did not vote. Warsh’s vote count surpassed Janet Yellen’s 56-26 confirmation vote in 2014 as the most divisive Fed chair selection in U.S. history.
Warsh’s confirmation also comes with a 14-year term as a member of the Fed Board of Governors.
Mortgage Bankers Association President and CEO Bob Broeksmit issued a statement congratulating Warsh and noting that his position on “risk-aligned” capital standards, impacting mortgage lending and commercial real estate, reflect his organization’s advocacy priorities.
“This includes our recommendations on the Basel III re-proposal, which will include reducing the risk weight on mortgage servicing assets to 100 percent and eliminating their cap included in Tier 1 capital, reducing the risk weight to 50 percent on warehouse lending lines, and better calibrating capital requirements for commercial and multifamily real estate lending and community investment activities,” Broeksmit said.
After the House voted Consumer Bankers Association President and CEO Lindsey Johnson indicated her organization’s confidence that Warsh would provide “steady leadership at a pivotal moment for the U.S. economy.”
“His deep understanding of financial markets and the banking system will be critical as policymakers work to support growth and expand opportunity for American households and businesses,” Johnson said in a statement. “America’s leading retail banks stand ready to work with Gov. Warsh to advance policies that promote a resilient financial system, increase access to credit, and help hardworking Americans navigate ongoing affordability challenges.”
Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey expressed appreciation for Warsh’s recognition of the role of community banks in the financial marketplace.
“In particular, he has shown an appreciation for the unique and irreplaceable role of America’s community banks as the lifeblood of local economies,” Romero Rainey said in a statement. “ICBA encourages policymakers in Washington to continue ongoing efforts to address excessive regulatory burdens on community banks and ensure a level regulatory playing field between banks and nonbank entities to support a secure environment for consumers and the financial system.”
American Bankers Association President and CEO Rob Nichols not only congratulated Warsh but also showed his appreciation for Fed Chair Jerome Powell’s time as head of the agency.
“Chair Warsh will bring deep experience and a steady hand to this critical role, informed by his prior service on the board during an extraordinarily challenging economic period,” Nichols said. “As someone who used to work alongside Chair Warsh, I have seen firsthand his strong understanding of monetary policy, financial markets and the essential role banks play in the economy. We look forward to working with him to further strengthen our financial system and spur economic growth. We also thank outgoing Chair Powell for his two terms leading the Federal Reserve and for his years of public service.”
Sen. Tim Scott (R-S.C.) issued a statement, calling Warsh’s confirmation an “important step toward restoring confidence and credibility to our central bank,” indicating he would keep the Fed focused on its core mission of ensuring stable prices, maximum employment and working to benefit the American people.
Sen. Elizabeth Warren (D-Mass.), who was critical of Warsh during his confirmation hearing, addressed the chamber to call the incoming chair a “sock puppet” who she expects to carry out the Trump administration’s “scheme” to “artificially juice the economy” rather than working to lower prices.