Nomination of Warsh for Federal Reserve Board of Governors Chairman and Member

This committee will come to order. Good morning to everyone.

Sure.

This is Kevin Wurst. Thank you for being with us today. We're excited about the opportunity to discuss america's economy with you uh this is uh really about the kitchen table uh people across our country want to have confidence in our institutions now that your nomination uh goes in the direction of reinforcing why they should have confidence in the institutions uh you've been nominated by the president to be the chairman of the federal reserve system the federal reserve plays a powerful role in our economy Monetary policy choices made at the Federal Reserve can affect the Americans' ability to buy groceries. Whether or not they can afford a home. How far their paycheck goes, especially at the end of the month. And in South Carolina, I hear all the time how families are working hard, doing everything right, and still feeling squeezed. Dynamics made prices go up. And paychecks have not kept pace. Too many parents are stretching every single dollar they have just to cover the basics. And too many workers are wondering when the economy will start to feel stronger at their kitchen table, not just on paper. Congress, President Trump, and his administration are focusing on fixing the disastrous mistakes of Bidenomics to restore Americans' confidence in our economy. Through efforts like the working families tax cut bill, we are helping Americans keep more of their hard-earned money. Compared to the average tax return under President Biden over four years, the average return is up twenty-four percent since then. Just in the last year, the average tax return is now around thirty-four hundred dollars, an eleven percent increase. Because President Trump and his leadership decided to focus, to focus on hardworking Americans who are struggling to make ends meet, paycheck to paycheck. Nearly half the country, half the returns filed in twenty twenty six claimed either deduction for tipped income, overtime earnings, senior citizens, or auto loan interest four major parts of the working family's tax cut bill that every single person on this dais to the right voted for. Under President Trump's leadership, Americans are keeping more of their hard-earned money, about three hundred dollars more every month. It is necessary that Congress continues to put money back in the hands of everyday Americans, and that is why it is important And I wanna be clear here. That is why it is important that we confirm Kevin Warsh to be the Federal Reserve Chair. The Federal Reserve has a clear dual mandate to promote stable prices and maximum employment. The policies of the Fed therefore directly affect Americans' cost of living and their income. And when the Fed is successful in fulfilling its dual mandate, affordability improves, with Americans taking home more money and paying less for everyday necessities. Unfortunately, in recent years, the Fed has faced real challenges. There have been questions about its decisions, its focus, and whether it has engaged in issues far outside its jurisdiction. Under the Biden administration, the Federal Reserve appeared to move with the political winds, raising real concerns about politics and weaponizing one of the most powerful weapons we have for good economically, the entire Federal Reserve System. For example, under the Biden administration, the Fed pushed climate focus initiatives only to reverse that climate agenda as soon as President Trump. took office. When actions appear to shift with changing political priorities, it can undermine confidence in the independence of this great institution. An independent Federal Reserve is essential to achieving its mission. Markets depend on it. Families depend on it. And that independence must be protected. The American people expect the Federal Reserve to stay focused on the economy, not politics. Today's hearing is an opportunity to refocus the Federal Reserve on its dual mandate to increase economic stability and affordability for everyday Americans. Kevin Warsh is battle-tested and brings the necessary experience from his time as a Federal Reserve Governor during the Great Recession. During his first term as governor, he helped our economy through the crisis and restored faith in the economy. He has seen the economy in its darkest days and understands how economic decisions affect job growth, our economy, and the opportunities that we have come to love as Americans. We want every citizen in this country to have a chance to live their version of the American dream. And that means having our private sector economy running as strong as possible. Which means your focus has to be on everyday Americans and not politicians, not the political wins, but on everyday Americans who desperately want to restore their confidence. in our institutions. Today, this committee will examine the plans Mister Warsh has for his return to the Fed, this time as chair, and how he plans to lead the institution at a critical moment to deliver lower cost and real relief for working families. For folks back home in the great state of South Carolina and across the country, the goal is simple. They want lower costs and more opportunities. The Federal Reserve plays a key role in bringing prices down and helping wages go up. Confirming Kevin Warsh will make sure that affordability is at the center of our economic agenda. Senator Warren is now recognized.

Thank you, Mister Chairman, and if I may, I I just wanna start by saying one of our members lost a child yesterday and I know our hearts go out to Mark Warner and his family and that that is true on both sides of the aisle that we may disagree on policies uh and we may do so vigorously but when it comes to the safety and security and the health of our families I know we are as one and uh we are praying for that.

And regular uh I think uh it'd be appropriate for us to take

Thank you.

a few seconds of silence on his behalf thirty six years old uh one thing you don't wanna do as a parent. Thank you.

Thank you. Thank you, Mister Chairman, and appreciate all you do.

OK.

So We should not be having this hearing today. And here's the context. First, over the past year, President Trump has racked up one economic failure after another, and Americans know that. Consumer sentiment just hit its lowest level on record ever. Inflation is rising and families are paying more for groceries, more for health care, more for utilities, more for housing, all thanks to Trump's chaotic tariffs and one big beautiful bill. And now his war with Iran is putting American troops in harm's way and further driving up the cost of nearly everything here at home. Second, in your testimony, you said it's perfectly fine for elected officials to state their views on interest rates. But that is not what Donald Trump is doing. The president has repeatedly and illegally attempted to take over the Fed. His bogus attacks on Governor Lisa Cook and Chair Powell were designed to threaten all the members of the Fed. to do Trump's bidding and open more spots for Trump flunkies. Why try to end the independence of the Fed? Because Trump's economic failures are causing him political problems, and he wants the Fed to use monetary policies to artificially juice the economy in the short term and this is his last chance to do that before the November elections. Having a sock puppet in charge of the Fed would also give the President access to the Fed's powerful authorities to enrich himself, his family, and his Wall Street buddies. It could mean granting special accounts to his family's crypto company, or bailouts to his friends on Wall Street if they get into trouble. In other words, a Fed under Donald Trump's control creates more opportunities for Trump's corruption. Third, the nominee before us today, Kevin Warsh, is uniquely ill-suited for the job as Fed Chair. In our meeting last week, we discussed the two thousand eight financial crash, where eight million people lost their jobs, ten million people lost their homes, and millions more lost their life savings. Giant banks, however, got hundreds of billions of dollars in bailouts. Mister Warsh was a Fed Governor from two thousand six to two thousand eleven. That's before, during and after the crash. And he said to me that he has no regrets about anything he did. So let's take a deeper dive into Mister Warsh's record. In the years leading up to the two thousand eight financial crisis, he was an enthusiastic cheerleader. for credit default swaps and complex securitizations. He dismissed repeated and increasingly urgent concerns from housing advocates across the country regarding subprime mortgages. He refused to use the Fed's authorities to address the risks that were building in the financial system. And when the crisis hit and the economy blew up, Warsh took on the job of Wall Street's personal liaison on the Fed board. He was quick to respond to concerns from Wall Street CEOs, and he worked tirelessly to arrange multi-billion dollar bailouts for them with nothing for American families. "No regrets," he says. " No regrets." After the crash, most people on the Fed saw millions of Americans unemployed. People had lost their homes and said, " Now might be a good time to lower rates and make the cost of borrowing cheaper for businesses to avoid more layoffs, and make it cheaper for Americans who are worried about paying their mortgages or their credit cards. But not Mister Warsh. Nope. He wanted to keep interest rates high. And he sang the same song for more than a decade, even as the economy struggled. When the job of Fed Chair became available during Trump's first term, as president, Warsh held on to his high interest rate inflation hawk views and Trump passed him by. Regretful, he soon reversed course and called for the Fed to pause interest rate hikes. Then, once Trump left office, Mister Warsh flipped again and was even criticizing the Fed for cutting rates in the fall of twenty twenty four. But as soon as Donald Trump became president a second time, Warsh reversed himself once more and began shouting from the rooftops about how the Fed should cut interest rates. Evidently, he learned his lesson. This time around, he sucked up to Donald Trump to snag his dream job. Mister Chairman, last week, every single Democratic member of this committee asked that you postpone this hearing, and instead conduct oversight on the president's role in directing bogus criminal probes into Chair Powell and Governor Cook. The Senate should not be aiding and abetting Donald Trump's illegal takeover of the Fed by installing his chosen sock puppet as chair. It's an invitation for corruption and for economic catastrophe. We have the power to stop it, and we should be using that power. Thank you, Mister Chairman.

Well, there you have it. I I'll I'll just say it it is interesting that we're gonna hear from Senator Dave McCormick, and his introduction of Kevin Warshew was last time unanimously confirmed by the United States Senate. Unanimously confirmed by the US Senate. Dave, the floor is yours.

Thank you, Mr. Chairman, uh, Ranking Member Warren, distinguished colleagues. It's really a great honor to introduce my friend, Kevin Warsh, and welcome him and Jane here today. Kevin has been a friend for many years. Winston Churchill observed that "for great leaders there comes", and I quote, " a special moment where they are figuratively tapped on the shoulder and offered the chance to do a very special thing. What a tragedy, he warned, if that moment finds them unprepared for that which would have been their finest hour. Colleagues, I'm here today to assure you, as someone who knows Kevin, and who knows this institution, that Kevin Warsh could not be more prepared for this, his finest hour. There's no one more fitting no one more fitting, no one more qualified to face this consequential moment as the seventeenth chair of the Federal Reserve. Now, I'm not gonna belabor Kevin's academic and professional record. They speak for themselves. Instead, I'd like to tell you about a man who Dina and I worked with decades ago and who has been someone I've called a friend for almost thirty years. President George W. Bush famously appointed Kevin to the Federal Reserve in two thousand six, when Kevin was just thirty five. He was the youngest appointed board member in history. But President Bush saw in Kevin what I believe you will see in him with your questions today. Wisdom that belied his age, now deepened by experience. A moral clarity a moral clarity, even in the most turbulent of times. A sharp and independent intellect, further strengthened by decades immersed in unforgiving global financial markets. And a deep, deep, honest understanding of how the decisions made in the marble hallways of Washington affect the lives of hardworking Americans. Now I, I, unlike many on this committee, have seen these virtues on display across decades of friendship. I first met Kevin in the late nineteen nineties when he and my younger brother were junior associates on Wall Street. And a decade later we served together in the crucible of the global financial crisis, I as the Undersecretary of Treasury for International Affairs and Kevin on the Fed Board. For nearly two years we worked hand in hand to contain the damage and navigate the country through the crisis. And I know that then-Chairman Ben Bernanke relied heavily on Kevin during those turbulent times, and I did too. And I've continued to seek his counsel regularly in the years since. Now, Kevin came to Washington all those years ago as an outsider. An idealistic young man determined to serve his country. One who has succeeded beyond all expectations. And he returns today as the ideal candidate to lead the Fed at this most crucial juncture. If confirmed, Kevin will inherit a federal reserve in need of repair and confronting serious uncertainty, an overextended balance sheet, a poor record on inflation, and a weak understanding of the profound opportunities offered. in today's economy. He is uniquely suited to confront these challenges. He brings a reformer's heart. He will shake up a stagnant institution at a time when change is sorely needed. He possesses a deep understanding of markets and is trusted by leaders across the financial industry. But, but he equally understands the real economy. Born and raised in upstate New York, he knows from personal experience how the actions of the Fed can change the lives of working families. It's no small thing. It's most no small thing to know firsthand how an increase in gas prices or mortgage rates, or an uptick in unemployment affect everyday Americans. The Federal Reserve must, must not be ruled by pointy head economists. pouring over outdated models and reams of market data. It needs a leader. It needs a leader who understands that the Fed's mandate of stable prices and maximum unemployment serves a higher purpose, the preservation of the American dream. Now, colleagues, Kevin Warsh has lived the American dream. I know in my heart he will always fight to keep that dream alive for all Americans. He is the right man for this pivotal moment. And I urge you, I urge you not to get caught up in the politics of the moment and support his speedy confirmation. Thank you, Mister Chairman.

Thank you, Senator McCormick. I will now swear in the nominee. Will you please stand and rise, raise your right hand. Do you swear that the testimony that you are about to give is the truth, the whole truth, nothing but the truth, so help you God? Do you agree to appear and testify before any duly constituted committee of the Senate? You may sit down. Your written statement will be made part of the record in its entirety. Please keep your oral comments to five minutes. Mister Warsh, you are now recognized.

Uh, th- thank you, Mister Chairman. Uh, I appreciate your consideration today. I've known you for quite a while, and I certainly appreciate the many courtesies you've given me, not just since the president's nomination but long before. Uh, it's honor to be with you, with ranking member Warren, and with the entire committee. Uh, I'm deeply grateful to President Trump for asking me to take on this public trust, because that's what it is, a public trust. The president believes that real economic growth in the US and real take-home pay will accelerate I share the president's confidence in our country and its people. America's economic growth potential is rising as we sit here today. I'm also especially happy that my wife Jane is here. She's been with me for many of the most important moments in my life. I'm grateful for her love and her personal accomplishments. I reciprocate that with somewhat of my own love, though I'm a little more stoic than she. And about every twenty years, um, I reintroduce her to this committee. She sat behind me twenty years ago. And uh, it was almost twenty years ago to the day, and so let me offer today what I said then um, Jane, happy anniversary. Um, I'm also thinking of my late mom and dad. Uh, they were uh paying great attention to this hearing twenty years ago. Uh, they're no longer with us. But I was always proud of them and the values they taught me. And I hope they'd be proud of me today. We start today With a note of broad agreement, even though we might have heard different narratives at the outset of this hearing, this is a time of great consequence for the nation's economy. As a former Fed Governor and friend or colleague of the last five Fed Chiefs, from whom I've learned plenty of lessons, I'm particularly alert to the challenges and opportunities confronting the institution that I cherish, the Federal Reserve. To the President, to the Congress, the nation, I owe my best judgment and my most faithful efforts in serving the mission that UN Congress has signed to the Federal Reserve, including full employment and stable prices. The American people are counting on the Fed to deliver on its commitments, perhaps now more than ever. The real highlights of my life are not on my resume. As Senator McCormick said, they include the individuals with whom I worked and from whom I learned. I graduated from high school in upstate New York. I had some exceptional teachers there and some brilliant classmates. I've learned we're lucky in life if we start out with good influences in learning and in character. A public school education gave me both of these, and I'm grateful. I made my way to Stanford and found myself in the company of some of the most highly accomplished economists and policymakers. George Shultz, former Secretary of State and Treasury, was among the great patriots at the Hoover Institution, who I came to know as a teacher, mentor and friend. He passed away right after COVID at age a hundred, but I still feel him with me. I could not have imagined a better formative experience than working from and learning from folks like him. I could tell you about all the things I learned, but maybe the most important was to be around people completely devoted to the ideas and ideals of our country. Silicon Valley in the early nineties, another fitting backdrop for all the things we confront today. I found myself in the right place at the right time. The US was at the vanguard of a new era of technological leadership, and I just looked out my door to see it. Now in the last fifteen years, I've gained deep experience in macro and in markets, working with Stan Druckenmiller. He never held a position in government, but is no less a patriot. He never got a PHD in economics, but I don't know a finer economic thinker. Without their guidance and the guidance of Condi Rice, my friend and I should say my boss at the Hoover Institution, I doubt I would be sitting before you today as the president's Fed chairman nominee. But I'm certain of one thing. Absent their tutelage, absent their example, I would not be as prepared for the urgent mission critical task at hand. In between these bookend experiences, I served uh quite a while ago as a governor at the Federal Reserve. At the at the birth, at the onset of the financial crisis. As Senator Warren said, our central bank played an indispensable role. And we benefited enormously from the credibility that our predecessors had built up and passed down to us, governors of the Fed at the time. In these unusual and exigent circumstances, I saw the Fed and its people at their very best. But I also witnessed an institution that was tempted to play a larger role in the economy and society. So let me be very clear. Monetary policy independence is essential. Monetary policymakers must act in the nation's interest. Their decision's the product of rigor, deliberation, and unclouded decision making. And as Senator Warren said, I do not believe that independence of monetary policy is threatened, when elected officials state their views on rates. Fed independence is up to the Fed. That has three implications. First, Congress is tasked with the mission to ensure price stability. Inflation is the Fed's choice. Second, Fed independence is at its peak in the conduct of monetary policy. And third, as the Chairman said, the Fed must stay in its lane. I'm committed to ensuring that the conduct of monetary policy remains strictly independent. Equally committed to work with the administration and Congress on non-monetary matters that are part of the Fed's remit and I commit myself to accountability. Finally, I'll just say this, Mister Chairman. Milton Friedman had a phrase that always stayed with me. He always worried about government officials that lured and hung around with what he called the tyranny of the status quo. Status quo practices and policies are especially harmful when the world is changing this fast. If confirmed as chairman, I will be faithful to the Constitution, to the Federal Reserve Act, and to the very best of the Fed's traditions. I believe a reform-oriented Fed can make a real difference to the American people. And if confirmed, I will seek to create an environment in which the best people do their best work. Candor and goodwill will go a long way in pursuing those objectives. And I suspect this hearing, Mister Chairman, will put us to the test. It's a real privilege to be here.

Thank you, sir. I I will say that we typically stick to a five minute uh opening comments and I would encourage all of us to stick with our five minutes as it relates to our question and answers uh we have full attendance today and it's gonna be really important for us to stick as closely to the five minutes as possible uh if we go over by by by much you'll you'll hear me which is an indication that you're already over and uh i'll do my very best to keep us on time kevin there are so many questions to talk to you about to ask you about to be honest with you uh and and i just wanna name a couple of them and we'll look forward to hearing more on these topics i will not have enough time to delve into some of the most important issues facing our country i'll take two of those issues and focus my time i'm sure my colleagues on either side will have a a conversation with you and ask questions about ai the ai future is gonna have massive impact on where we go as a nation it's got massive impact on your dual mandate as relates to full employment there, our production may go up while our while our employment stays flat. So this is a really important question that at some point we should delve into. I also think that someone should spend some time uh talking about our balance sheet. We have a nearly a seven trillion dollar balance sheet at the Federal Reserve. Too much attention has been paid to your balance sheet, and not enough attention has been paid to the nation's balance sheet. I think it's really important for us to dig into that issue as well. Digital assets, the future of uh finance in the world seems to have a major component of it being artific uh uh being uh digital assets the market structure legislation we don't want your comment on but the important role of of the blockchain in the future is another really important part of the future of our economy. I will spend some time talking about affordability and the importance of the independence of the fed. Uh, one of the things I I I've appreciated about your previous comments is the importance that you have placed on the dual mandate, stable prices, which typically comes through the form of interest rate changes, as well as promoting maximum employment. I think those two will become more challenging in the current environment, one obviously, the second one being the AI and the future of full employment. You've criticized the Federal Reserve for getting too big, mismanaging inflation, I I'm sure you know the definition of transit. so i won't ask you but i got a feeling you know and some of your predecessors did not uh compromising the independence of the fed i think we should spend more time on finance less time on climate change on politics on who is or who is not in charge uh i think you would agree on those issues so i will not ask you i will ask you however that under your leadership how will you steer the federal reserve to address the real life issues of affordability is my first question. And my second question will be about how do you make sure that the Federal Reserve stays out of the lane of external influences?

Mm-hmm. Well, thank you, Mister Chairman, there's probably no more pressing question than the cost of living. Um, we know at the Federal Reserve that price stability was an objective that the, that you and your colleagues gave to the Fed. So when over the course of the last several years, especially after the after COVID, when prices went up to the tune of twenty five to thirty five percent for virtually all death trials of the American people, that's an indication that the Fed missed its mark. And we are still dealing with the legacy of the policy errors in tw- twenty twenty one and twenty twenty two. Um, once you let inflation take hold in the economy, It's more expensive and harder to bring it down. And so the fatal policy error going back four or five years is still a legacy that we're dealing with. We need, in my judgment, fundamental policy reforms to fix it. And while it's true that inflation is less problematic, meaning the rate of change in prices is less severe than it was some years ago, hardworking Americans are no doubt feeling it. I think that means a regime change in the conduct of policy. I think that means a different new inflation framework. I look forward to working with my colleagues at the Fed if confirmed to achieve that. I think it means, as you suggested, using tools differently. The Fed has an interest rate tool and a balance sheet tool. My view is the interest rate tool gets in the cracks. It's fairer. Uh, the balance sheet tool disproportionately helps those with financial assets. The interest rate tool hits the entire economy. So we need a new framework, new tools, and I'd also say, Mister Chairman, new communications.

Yes.

Think part of the reason why after making a mistake in twenty twenty one and twenty two, the mistake was compounded, is the Fed gives its forward guidance. The Fed tells the whole world what their dots are going to be, what their forecasts are going to be. Well, the Fed's human. Then then then they hold on to those forecasts longer than they should. I think if the Fed were to wait until it gets into a meeting before making a decision that incremental deliberation can keep the central bank from compounding its errors. I think these are big changes that are needed, and if confirmed, I look forward to doing it.

Thank you very much. Banking member Warren.

Uh, thank you, Mister Chairman. So the Fed has been plagued by deeply disturbing ethics scandals in recent years, involving at least six Fed officials. So it's critical that the next chair have no financial conflict. none. Uh, you have more than a hundred million dollars in investments that you have refused to disclose to ethics officials and to the public. So let me ask, do the Juggernaut Fund or the THSDFSLLC invest in any companies affiliated with President Trump or his family, companies that have facilitated money laundering, Chinese-controlled companies, or financing vehicles established by Jeffrey Epstein.

Uh, Senator Warren, thank you. So, let me first share a point of agreement with you. Um, the Fed has two tools. One is its monetary policy and the second is its credibility.

I

And the scandals that you talked about, the ethics problems you talked about,

Mister Rush, I appreciate that, but I have very limited time.

went to the core of the credibility that has hurt the Fed.

Could you answer my question, please? I ask. You have a hundred million dollars in undisclosed assets. And what I'm asking is, are any of those with uh this outfit that invests in um uh companies affiliated with President Trumpery's family, companies that have facilitated money laundering, Chinese control companies, or financing vehicles set up by Jeffrey Epstein? It's a yes or no question.

Uh, Senator, I have worked tirelessly with the ethics officials at the Office of Government Ethics.

Yes, and you have not revealed a hundred million dollars in assets.

Come to an ethics agreement with them and have agreed, Senator, to sell all of my financial assets,

That's not my question. Mister Walsh, are you refusing to tell us

including the Duquesne assets.

if you have investments, for example, in vehicle setup uh to advance Jeffrey Epstein? Is that what you're telling us? You just won't tell us?

Uh, Senator, what I'm telling you is that those assets that you represent at juggernaut will be sold if I'm confirmed before I take office and sign the oath of office.

All right. Let me let me follow up. Let me follow up on that. Will you at least disclose how you plan to disclose and divest these secret assets. I'm sure you understand that the public might question your motives if, for example, billionaire Stanley Druckenmiller, uh, who you honored in your opening statement, and who makes a living guessing what the Fed will do next, cuts you a massive check for a hundred million dollars as you take the oath of office to become the new Federal Reserve Chair.

Uh, Senator, as you know, it sounds like you're fighting up it might not be with me, but the Office of Government Ethics. I have come to full agreement with them and have agreed to divest all of those assets,

I'm asking you a very straightforward question,

especially those that you referenced before I take you out of office.

Mister Walsh, and that is, will you disclose how you divest those assets, or will you just uh collect a check for a hundred million dollars from someone whose whole business is betting on what the Fed will do?

as I said to the ethics officials at the Federal Reserve and the Office of Government Ethics,

I'll take I'll take that as an always will.

and they agreed, I would be redeeming my assets before I take office.

So Donald Trump has made clear that he does not want an independent Fed. In fact, he has said, and I quote, anybody that disagrees with me will never be Fed chairman. And he's made clear that you are his sock puppet, saying last week that interest rates will drop, quote, when Kevin gets in. Yeah, I think they do. Not when economic conditions change, we'll get lower rates. Not when the economy needs it, nope. He said, when my guy, Kevin Warsh, is in there, we'll get the interest rates that I, Donald Trump, wants. So independence takes courage. Let's check out your independence and your courage. We'll start easy. Mister Warsh, did Donald Trump lose the twenty twenty election?

Um, uh, we try to keep politics, if I'm confirmed, out of the Federal Reserve.

I'm just asking you a factual question. I need to know, I need to measure your independence and your courage.

Sure. S- Senator, I believe that this body certified that election many years ago.

That's not the question I'm asking.

What

I'm asking, did Donald Trump lose in twenty twenty?

Man, I'm suggesting you in twenty twenty the Fed made a huge inflation problem,

I'm suggesting you can't answer that.

and you certified the election.

So let me ask you another question.

And you've been keeping politics out of monetary policy,

In our meeting,

and monetary policy out of politics.

you said you would be independent because you're quote, a tough guy. Those were your words, tough guy. And you will be able to stand up to President Trice, uh Trump. So let's try it again. Name one aspect of President Trump's economic agenda with which you disagree.

Well, Senator, the Federal Reserve in recent years has wandered outside of its remit, wandered into other areas.

I'm asking for something you disagree with Donald Trump on. Just one

That's not something I'm prepared to do. If I'm confirmed the Sen- the the Federal Reserve should stay in its lane.

economic one economic issue, just one, just one little place. Or you disagree with Donald Trump.

Well, I do have a a disagreement actually, Senator, with the President. I think even this morning he said that he thought I was out of central casting. Um, I think central casting, I'd look older, grayer, maybe show up here with a cigar of sorts.

Quite adorable. But you know, we need a Fed chair who is independent. That's the only way we preserve the independence of the Federal Reserve.

I agree.

If you can't answer these questions, you don't have the courage and you don't have the independence.

I agree with you on independence, Senator.

Thank you, Mr. Chairman.

Senator Reynolds.

Thank you. Thank you, Mr. Chairman. Um, Mr. Warsh, first of all, welcome. And, uh, I appreciated the opportunity to visit with you personally, within the office. I agree with you and I, I think Fed independence is critical. And I think that's, uh, an item that, uh, you and I agree on wholeheartedly. I wanna take an opportunity just to kind of perhaps give you an opportunity to respond. I know that uh the ranking member had a number of items that she expressed concerns with. I I'd like to give you an opportunity to just kind of work this way through and let me just ask you a few questions and I'll allow you to take the time to fully answer the questions. Uh as I understand, Mister Warsh, you worked with the career ethics professionals at the Office of Government Ethics and at the Fed to come to an agreement in terms of your dissolution of some of the assets that you as as a businessman have. Is that correct?

Uh, y- yes, Senator, that that is correct. I worked with the Fed ethics officials first, answered all of their questions, then with the career professionals, the Office of Government Ethics, uh, answered all of their questions, and then they drafted, wrote up an ethics agreement, um, which is part of the public record. But because I agree with Senator Warren on the ethical questions that have been raised over the last several years by several people that were members of the FOMC, so that there's no question about my independence, no question about the clarity of my financial record, I agreed to divest virtually all of my financial assets, the large majority of which will be divested before I raise my right hand and am sworn into office, if confirmed by this body. So I've gone above and beyond, um, not for any spe- other special reason other than the Fed needs to, um, reestablish its credibility because the conduct of policy depends on it.

So, let me just, for the record, the agreement which you have signed clearly states that you have agreed to divest your assets that are in question within ninety days of confirmation, if you have not already divested them. That is correct.

Yes, Senator, and in and in fact, the large majority of those assets will be divested before I am sworn into office, if confirmed.

Thank you. Um The career ethics professionals were the ones that basically had sent your signed paperwork to this committee's chief clerk. I really question whether or not they would have done that if they did not come to the ethics agreement with you in the first place. Correct?

Yes, I presu- I presume that's right. We had a very good working relationship and I'm happy to be sitting after the, the divestiture and cash or T bills or whatever is the permitted asset, so we can get back to the business of fixing the Fed, reforming an institution that has lost its way a bit, that has missed the mark. As Chairman Scott said at the outset, uh, This inflation risk is still something that's being talked about around kitchen tables and and boardrooms. My preferred definition of stable prices is a little different than most academics. Uh, I believe that price stability should be a change in prices such that no one's talking about it. That's an old-fashioned definition, but I think it's still valid. And the sooner that we can reform the institution, with my colleagues if confirmed, the sooner we can ensure price stability. And we can have a new set of leaders atop the institution with high credible ethical standards to um return the Fed to what it should be. The independence that both Chairman Scott and Senator Warren mentioned, critically important. But independence has to be earned. And it's earned by delivering on the promises, the commitments that the Fed has made. And as the Fed hasn't delivered on those promises, we shouldn't be surprised that we hear politics that are entering the room at the Fed. And you get the politics out of it, so the Fed can focus on its day job, deliver on full employment and stable prices.

It's true that people wanna see stability within the Fed. But is it OK for a Fed governor or a chairman to change their mind on a particular policy?

Uh, it's more than OK, it's essential. Uh, economics is not physics, it's not math. Frankly, most of us that ended up in the economics business, we started like I did as a math major. It was too hard. Uh, so we end we ended up in economics. In economics, what we need to do is focus the left of the decimal point, not to the right of the decimal point. We need to focus on the big things. And if mistakes are made, central bankers, economic policymakers need to correct them fast. The real mistakes, the mistakes that cause inflation be persistent, to undermine hardworking Americans' standard of living, and then when those mistakes go on.

Thank you. Thank you, Mister Chairman.

Yes, sir. Senator Reid.

Uh, Mister Chairman, before we start the next question, I ask that we have entered into the record uh the US Office of Government Ethics certification which requires that all nominees disclose all of their assets and showing that Mister Warsh is out of compliance and that um uh he has not met the ethics requirement.

What what without objection, I will note however that what has been clearly articulated is that he will, according to his agreement with OGE, do what many others have done as well within nine days. Be not only in compliance, but to have divested himself from any assets that are in question.

Uh, Mister Chairman, can I ask, I don't think we've had other nominees who are out of compliance and not disclosing at the time they come before the hearing.

Not on this committee, that's correct.

Not in this committee.

Before we, before we, here's what we're not gonna do.

Fair enough.

We're not gonna have two chairman. For sure.

Just asking.

Number one. Number two, what we're also not gonna do, is debate what we're putting into the record. And finally, what we are going to do is have a conversation about America's economy and frankly, we all deserve the opportunity to ask our questions. We don't get to figure out the answers but we do get to ask our questions uh i hope that we are able to continue in that direction as long as we are we're gonna have a very good hearing and if we're not then i i will find a way to help us to expedite getting back on track senator reed

thank you very much mr. chairman uh mr. wash uh until you dispose of all the assets you've identified ethics you will not be in compliance is that correct

that that's not my understanding excuse me sir

my understanding is that a signed ethics agreement uh provides duties and responsibilities on me and duties and responsibilities on the government and that's what the nature of the ethics agreement is

you have agreement that within ninety days you will uh dispose of all your assets all your assets is that correct

uh senator i have an agreement within ninety days so that there

Excuse me. What you've said is that you will take the oath, if confirmed as chairman, with assets that have already been identified as presenting potential conflicts of interest. Will you agree to not take the oath until you have fully disposed all the assets that you then identified?

Uh, Senator, I'll agree to take the oath pursuant to the terms of the ethics agreement that I struck with the Office of Government Ethics. I don't think anyone could do more than that other than me. I've agreed to to divest even more assets that I will have virtually no financial assets.

The divestiture is totally up to you. You can select what assets you're disposing of, what assets you keep, is that correct? And then still be sworn in as chairman.

Uh, the divestiture is up to the agreement that I struck with the Office of Government Ethics.

Who makes the decision as to what assets are invested you or the Office of Government Assets?

Uh, both of us, that's why it's an agreement.

Excuse me. Uh. i must commend you on the way you can circularly go around questions and not answer them it's it's a skill uh fortunately it's not a good skill for the chairman of the of the federal research board we typically ask questions in respect to get direct faithful answers you've never you haven't given them to the ranking member and you're not giving it to me so um again uh you feel you will not be uh you will be compliant if after ninety days you still have a significant number of assets that have been identified as presenting conflict of interest. Is that your view?

No, no, Senator, if I were to violate the uh ethics agreement, I would not be in compliance. If I follow the agreement, I will be.