Trump Nominates Kevin Warsh to Lead the Fed as Powell Mounts a Public Defense of Staff

President Trump has nominated Kevin Warsh, a former Federal Reserve governor and frequent critic of the central bank’s modeling and staffing, to succeed Jerome Powell when his term expires in May. The administration’s move crystallized expectations on prediction markets and among investors, where platforms such as Polymarket and Kalshi sharply boosted odds for Warsh while other finalists — including NEC Director Kevin Hassett, Governor Christopher Waller and BlackRock’s Rick Rieder — also gained attention. Powell, speaking publicly amid the unfolding succession drama, emphasized that the Fed’s workforce comprises experienced public servants and sought to avoid partisan framing while also saying the institution tracks structural shifts such as those driven by artificial intelligence. The nomination arrives against an active Justice Department criminal inquiry in Washington, D.C., involving grand‑jury subpoenas tied in part to testimony and a high‑profile renovation of the Fed’s headquarters; the Fed has so far declined to produce some materials, and the U.S. Attorney’s Office for the District of Columbia is leading the probe. Republican Sen. Thom Tillis announced he will not support a Warsh confirmation until the DOJ matter is resolved, a posture that could block committee reporting given the narrow margins on the Senate Banking Committee and make a floor fight likelier. Markets reacted modestly: equity futures dipped and fed‑funds futures pushed the expected timing of an initial rate cut later into the summer, reflecting investors’ reassessment of policy under potential new leadership. Observers note that a chair’s formal powers over supervision, stablecoin oversight and payment rules are constrained by shared authority across the Fed, other regulators and Congress, so doctrinal shifts would be mediated by votes, rulemaking processes and interagency coordination. The mix of prediction‑market signals, legal scrutiny and a pledged committee hold illustrates a politicized confirmation environment that elevates the risk of prolonged uncertainty at the institution. If the Banking Committee fails to report the nomination, the White House could face a visible and extended Senate fight that would amplify short‑term volatility and complicate transition planning. Operationally, calls to change modeling approaches or slim staff would take years to implement; near‑term disruptions would stem chiefly from confirmation delays, public debate and the legal strategy the Fed and DOJ adopt. The most immediate items to watch are any committee procedural moves, DOJ filings or negotiations over subpoena compliance, early communications from Warsh and the composition of the Federal Reserve leadership team that could shape markets’ expectations about policy continuity.