Kevin Warsh got his break as dusk was beginning to set in a frigid Washington on Thursday afternoon.
Donald Trump had summoned Warsh to the White House for a final make-or-break meeting. Treasury secretary Scott Bessent would also be there. Months of twists and turns in the cut-throat race for chair of the Federal Reserve were ending.
Warsh had been spurned for the Fed chair job nearly a decade earlier. Now he had just a short window for the most important meeting of his life. In a day peppered with a televised cabinet meeting, an announcement on fighting drug addiction and a film screening, Trump had carved out just enough time to speak with Warsh.
“I think there was some expectation just because of the timing that he was either going to get it that day or he was going to be out,” said a person familiar with the meeting. “Either way, at least we’d have closure.”
Warsh emerged jubilant. The partner at billionaire investor Stanley Druckenmiller’s family office since 2011 had toppled challengers — including one of Trump’s closest economic advisers, Kevin Hassett — to win the president’s approval. Or so it seemed.
Trump had planned to announce his pick within hours of his meeting with Warsh, people familiar with the choreography said. But then the plan shifted. Instead, the president chose to tease his nominee — without naming him — when he spoke to journalists on the red carpet at the Kennedy Centre later in the evening.
“A lot of people think that this is somebody that could have been there a few years ago,” the president said.
Warsh’s odds on prediction markets surged. They lurched higher again as the FT and other media reported that the president had settled on Warsh. At 6.48am on Friday, Trump made it official.
“I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best,” he wrote in a long Truth Social post.
A Trumpian flourish capped the post. Warsh looked the part, he said, out of “central casting”. It was not the first time the president had admired the 55-year-old investor’s “really handsome appearance”.
It was an announcement global investors had been awaiting for months — and culminated in a campaign by Warsh to win a job that his allies, including Druckenmiller and JPMorgan chief Jamie Dimon, suggest he is uniquely qualified for.
Along the way, Warsh saw off not just Hassett, but current Fed governor Christopher Waller and Rick Rieder, the BlackRock executive who became a dark-horse contender late in the race.
Allies in each camp spent months privately disparaging rival candidates with varying severity. Always, the focus was on winning over the audience of one in the Oval Office.
Hassett made ubiquitous TV hits touting the president’s message. Others like those close to Warsh worked behind the scenes. Rumours swirled about the use of opposition research and other tactics more commonly deployed in high-octane political campaigns than the usually stately race to run the US central bank.
Even Waller’s dissent on Wednesday when the Fed voted to hold interest rates steady was seen by many in the market as a sop to Trump, who had spent months demanding the central bank slash rates.
“Fed and Supreme Court appointment processes are often dramatic,” said Andrew Levin, a former Fed economist who is now a professor at Dartmouth College. “But the extent to which this particular White House doesn’t always mind drama also maybe played a role here. It’s kept people in suspense.”
But Warsh’s tortuous path to US central bank chief had begun nine years ago, when Trump considered him for the role during his first stint in the White House. He was young, but had the résumé: Ivy League-educated, a longtime conservative and a former Fed governor.
He also had the right personal relationships. He has close ties to the conservative ecosystem around Mar-a-Lago, Trump’s Florida base, through his wife Jane Lauder, whose ultra-wealthy family have been big supporters of the president. Some Lauder family members own property on the same stretch of Palm Beach shoreline as Trump’s Mar-a-Lago.
It came as a huge disappointment to Warsh when Trump picked Jay Powell in 2017, according to people familiar with the matter.
But signs that Warsh would get a second shot at a major role in the US economy emerged after Trump won the presidential election in November 2024.
About two weeks later, Trump summoned him for an interview at Mar-a-Lago. He grilled the investor to test his suitability for another crucial role, as US Treasury secretary, according to people familiar with the meeting.
It was an awkward moment for Druckenmiller, the billionaire investor who was a mentor to both Warsh and Bessent, who by then was already the frontrunner to lead the Treasury department.
Warsh, though, remained fixated on running the central bank — and primed for the moment when Trump began fielding candidates to replace Powell, whose term ends in May.
The strongest pitch from investors and other allies was that Warsh would be a natural co-ordinator with Bessent, sharing markets nous, a familiarity with Wall Street, and misgivings about what both men considered the Fed’s mission creep.
“In my view, forays far afield — for all seasons and all reasons — have led to systematic errors in the conduct of macroeconomic policy,” Warsh said in a widely cited speech in April on the fringes of IMF meetings in Washington.
“The Fed has acted more as a general-purpose agency of government than a narrow central bank. Institutional drift has coincided with the Fed’s failure to satisfy an essential part of its statutory remit, price stability,” he added.
The remarks resembled an extensive essay Bessent published in The International Economy later in the year, in which he said, “the Fed’s new operating model is effectively a gain-of-function monetary policy experiment”.
The race to replace Powell heated up in the autumn. Bessent helped to lead the search, with White House chief of staff Susie Wiles attending some of the interviews, according to people familiar with the matter.
The meetings were classic Trump: relaxed get-to-know-you affairs instead of buttoned-up interviews in the Oval Office, the people said. But Bessent was more pointed, demanding candidates outline their stance on cutting rates — a central Trump goal — and his own bête noire: the Fed’s quantitative easing programme.
Things went into high gear in December. At the start of the month, the odds for Hassett to win the nomination shot up to as high as 80 per cent on Polymarket, the prediction market platform that has been intensely watched during the race.
That was when Wall Street began to “freak out”, according to one major investor. Investors worried that Hassett would be too compliant with Trump’s calls to indiscriminately cut interest rates, compromising the Fed’s independence and eroding the US’s long-held role as the world’s pre-eminent financial market.
Behind the scenes, Wall Street’s lobbying apparatus kicked into gear. Leaders of major asset managers, bond-buying investment firms and banks quietly began to apply pressure on the Trump administration to reconsider Hassett for Fed chair, the FT reported.
Hassett’s chances suffered a significant blow after Powell revealed at the start of this year that he was the subject of a criminal probe by Trump’s justice department. The fierce backlash from former Fed chiefs, international central bankers and even some Republicans quashed Hassett’s chances by bringing the central bank’s independence starkly to the fore.
Hassett’s loss was Warsh’s gain. Days later, Trump suggested that he would keep his economic adviser in the White House.
Warsh’s longtime ally Druckenmiller stayed out of it.
“I literally had zero involvement. I thought it was best to stay out of it,” he said in an interview. “I was so tempted to weigh in and say something to Scott [Bessent], but I never did.”
But others made their views known. Around this time, JPMorgan’s Dimon said at an invite-only event hosted by the bank for other CEOs that he thought Warsh would be the best man for the job. It was one of the first semi-public endorsements from a high-ranking Wall Street executive.
The final furlong of the race became combative.
People close to Hassett claimed Warsh had close ties to George Soros, the billionaire hedge fund manager who has become an enemy of the Republican Party for his leftwing politics, according to two people familiar with the matter.
Hassett on Friday told CNBC that Warsh was a “great choice”.
“President Trump has consistently tapped the best and most qualified individuals for key positions in government,” said White House spokesperson Kush Desai. “Every member of the Trump administration is aligned on supporting Kevin Warsh’s swift confirmation to the Federal Reserve and continuing to restore economic prosperity for the American people.”
When BlackRock executive Rieder suddenly became a favourite — at least in betting markets — details about his past donations to Democratic politicians and Trump’s Republican primary foe Nikki Haley surfaced almost as quickly.
Treasury department officials sounded out big bond investors for their views on Rieder, who is well known to investors from his two-decade stint at Lehman Brothers.
The whiplash that has defined the entire race for Fed chair over the past several months continued into this week, right until Trump summoned Warsh to the Oval Office.
The president who has described his current Fed chair as a “stubborn mule” was certain that this time he had it right.
“In the whole country I would say that this was the perfect candidate,” said Trump. “This is the man that’s most qualified.”
Additional reporting by James Politi and Kate Duguid