Trump to nominate Kevin Warsh as Fed chair

• A source close to the process tells Axios: "The job is about persuasion. And over multiple meetings with President Trump, Warsh convinced him he was the right guy at this moment in history."

Driving the news: "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," Trump said on Truth Social.

• "On top of everything else, he is 'central casting,' and he will never let you down. Congratulations Kevin!"
• Warsh has expressed confidence that Trump's tax and deregulatory policies are generating a growth surge, and that the Fed should allow it to boom rather than act to restrain it.
• Warsh wrote in November that "the U.S. is poised to grow faster than any other major economy," and that this is "thanks in large part to pro-growth policies championed by President Trump."
• Powell's four-year term as chair ends May 23.

Zoom out: Warsh brings deep relationships in Republican politics and on Wall Street to the job, as well as a measure of independence from the administration compared with Kevin Hassett, the White House staffer who was the other top finalist for the job.

• A one-time investment banker, Warsh worked in President George W. Bush's White House, then as a Fed governor from 2006 to 2011.
• Warsh acted as a close adviser to then-chair Ben Bernanke during the Global Financial Crisis, often acting as Bernanke's emissary on Wall Street and on Capitol Hill.
• Since then, he has been a partner in legendary investor Stan Druckenmiller's firm and a fellow at the Hoover Institution at Stanford University.

What to watch: Warsh's confirmation process might be throttled by a criminal investigation that is dominating Powell's final months as Fed chair.

• Sen. Thom Tillis of North Carolina, an important Republican on the Senate banking panel, on Friday morning doubled down on his refusal to support any future Fed chair.
• "I will oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman, until the DOJ's inquiry into Chairman Powell is fully and transparently resolved," he posted on X, after noting that Warsh was a "qualified nominee with a deep understanding of monetary policy."

Friction point: Any Fed official would need to be confirmed by the banking panel before moving on to a full Senate vote. Republicans have just a two-seat majority on the panel.

• Losing even one Republican — like Tillis — could derail the nomination.

Zoom in: Warsh has assailed the Fed for its years of quantitative easing programs and bailouts, which have swelled its balance sheet to $6.5 trillion.

• He has argued that shrinking that balance sheet would create room for the Fed to cut short-term interest rates, in line with Trump's wishes.
• He is sharply critical of the Powell Fed's approach to bank regulation, which he argues has damaged the flow of credit to American business.
• Moreover, Warsh argues that the Fed has enabled massive deficit spending, particularly with its pandemic-era monetary policy and expanded its remit far too widely.

What they're saying: "The Fed's bloated balance sheet, designed to support the biggest firms in a bygone crisis era, can be reduced significantly," Warsh wrote in a November Wall Street Journal op-ed.

• "That largesse can be redeployed in the form of lower interest rates to support households and small and medium-size businesses," Warsh added.
• "The Fed's rules and regulations have systematically disadvantaged small and medium-size banks, which has slowed the flow of credit to the real economy."

The intrigue: "The Fed has acted more as a general-purpose agency of government than a narrow central bank," Warsh said in a speech this past spring.

• "Institutional drift has coincided with the Fed's failure to satisfy an essential part of its statutory remit, price stability," he said. "It has also contributed to an explosion of federal spending."

Of note: Warsh, if confirmed, would be the second consecutive non-economist Fed chair.

• He has a law degree from Harvard. (Powell is also trained as a lawyer.)
• Warsh was the youngest Fed governor in history when appointed to the board at age 35. He is now 55.
• He is married to Jane Lauder, heir of the Estée Lauder cosmetics empire.

Editor's note: This story has been updated with comments from Sen. Thom Tillis (R-N.C.)