What to know about Trump's finalists to replace Powell as Fed chair

• Treasury Secretary Scott Bessent, speaking to reporters on Air Force One overnight Sunday, confirmed the names of five finalists to be the next Federal Reserve chair. He said he expects the selection to be made before year's end.
• Here, we tick through the five, in order from highest implied odds on the prediction market Polymarket (as of 11am ET Monday) to lowest.

Kevin Hassett (36%) has the closest relationship to the president among the finalists, a key reason oddsmakers put him on top. He served in top White House roles in both the previous and current Trump terms, and worked for presidential son-in-law Jared Kushner's private equity firm in between.

• For a president who deeply values loyalty, and has often expressed frustration that Powell won't take cues from the White House, that is appealing.
• It's a double-edged sword, though. If markets perceive a Fed chair Hassett as less-than-independent of the White House, he may have less room to maneuver in the event of a crisis or inflation surge.
• Would bond markets have the same confidence that a Hassett Fed will raise interest rates as necessary to keep inflation under control as they would a chair who is less closely tied to the president?
• Moreover, Trump may find it easier to blame the Fed for any economic disruptions that arrive if its leader isn't a former White House insider.

Christopher Waller (23%) is a current Fed governor appointed by Trump in 2020, who has emerged as one of the central bank's most influential and independently minded intellects.

• Silver-haired, fit from weightlifting, and with a gravelly voice and confident manner, he may align with Trump's oft-stated desire for "central casting" candidates for big jobs.
• He is a longtime Fed insider — he was a vice president at the St. Louis Fed before coming to Washington — which could be both a feature and a bug.
• Waller knows how the institution works and how it might be reformed more to the Trump administration's liking. But he could be viewed as too much of an insider to bring the sweeping change Bessent has advocated.
• Waller shows genuine enthusiasm for opening the Fed's payments systems more to cryptocurrency-adjacent decentralized finance companies, helping win friends in an important part of the Trump coalition.

Kevin Warsh (16%) was a Fed governor during the 2008 financial crisis and later broke with the Fed's shift toward large-scale quantitative easing to try to boost the economy in the 2010s.

• His thinking on what he views as an overly expansive Fed — bond-buying under QE, as well as its push into various forms of private lending during the pandemic and the 2023 regional bank failures — mirrors Bessent's critique.
• He is politically savvy and well-connected in conservative policy circles. He worked in the George W. Bush White House, and his father-in-law Ronald Lauder is a major Republican donor.
• He has traditionally been a monetary hawk, favoring that the Fed keep its eye on the ball on containing inflation. It's hard to reconcile that with Trump's longstanding desire for cheaper money.

Rick Rieder (9%) runs BlackRock's bond investments and is a well-known financial commentator, especially if you watch a lot of CNBC. He's a known quantity on Wall Street with deep knowledge of the fixed-income markets through which the Fed's policies affect the economy.

• BlackRock is a huge organization, so he is not unfamiliar with large, complex bureaucracies. But he would be new to the Fed system, as well as to Washington maneuvering.
• That makes him Waller's inverse. He would bring truly fresh eyes to the Fed. But he may lack the institutional knowledge of where the bodies are buried and how to carry out change.
• Rieder is still carrying out his day job even as the Fed chair decision swirls, so we have his up-to-the-minute thinking on the economy.
• He wrote in a note Friday, off of September inflation data, that "lower policy rates will have much more of a positive influence on the system than any adverse effects."

Michelle Bowman (3%) was appointed to the Fed's Board of Governors by Trump in his first term as its community banking specialist. The president elevated Bowman, who goes by Miki, to vice chair of supervision earlier this year.

• Her background would be unconventional for a Fed chair: She comes not out of the economics profession or high finance, but community banking. She was the state bank commissioner of Kansas before joining the Fed, and vice president of a small Kansas bank before that.
• She has been willing to throw sharp elbows and buck the conventional wisdom inside the Fed, a likely source of appeal to a president who seeks wholesale reform of the institution.
• She dissented from many Biden-era regulatory steps and, last September, offered the first Fed governor dissent on monetary policy in two decades, opposing a supersized rate cut just before the presidential election.

Reality check: Traders on Polymarket are not treating the selection of one of Bessent's named finalists as a done deal.

• The market views Fed governor Stephen Miran (5%), former St. Louis Fed president James Bullard (3%) and Bessent himself (3%) as still in play.