Business
Kevin Warsh, Trump’s Pick to Lead Fed, Faces Senate at Tricky Moment
Kevin M. Warsh, President Trump’s pick to lead the Federal Reserve, has spent years refining his pitch for why he should get one of the most powerful economic jobs in the world.
At his confirmation hearing on Tuesday, he will have to convince Senate lawmakers that he is ready to step into the role, which has become politically explosive amid Mr. Trump’s relentless attacks on the institution and its current chair, Jerome H. Powell.
Mr. Warsh, who is scheduled to testify before the Banking Committee at 10 a.m., plans to commit to being “strictly independent” on decisions related to interest rates, according to his prepared remarks. He also plans to tell lawmakers that he is unbothered by Mr. Trump’s incessant calls for substantially lower borrowing costs. And he will use his opening statement to underscore his focus on disrupting the “status quo” at an institution he said just last year was in need of “regime change.”
“In a time that will rank among the most consequential in our nation’s history, I believe a reform-oriented Federal Reserve can make a real difference to the American people,” he plans to tell lawmakers, adding: “The stakes could scarcely be higher.”
Mr. Warsh, 56, faces significant hurdles to winning confirmation. He has broad support among Republicans, who control the Senate and can confirm him along party lines. Yet his candidacy has stalled because of an ongoing investigation by the Justice Department into Mr. Powell and his handling of the Fed’s headquarters renovations.
Mr. Powell’s term as chair ends May 15, but Mr. Warsh looks increasingly unlikely to be in place by then. That’s because Senator Thom Tillis of North Carolina — a Republican on the Banking Committee who has expressed support for Mr. Warsh — has vowed to block any attempt to confirm a new Fed chair until the legal threats into Mr. Powell are resolved. For Mr. Tillis, the investigation is a blatant attempt to coerce Mr. Powell into lowering rates, undermining the Fed’s independence and confirming the politicization of the Justice Department.
“I’m not going to condone bad decision-making and bad behavior,” Mr. Tillis told reporters on Monday in reference to the Justice Department’s lack of evidence of any wrongdoing.
The department has vowed to continue its investigation, despite numerous legal setbacks.
“I think ultimately, he will be confirmed,” Senator John Kennedy of Louisiana, another Republican on the committee, told reporters on Monday. “I just don’t know what decade.”
Mr. Warsh’s ascent would mark a homecoming for the Wall Street financier, who served as a Fed governor from 2006-11.
Since leaving the Fed, he has amassed assets worth well in excess of $100 million, according to financial disclosures submitted before his hearing. Those have drawn scrutiny because Mr. Warsh repeatedly invoked “pre-existing confidentiality agreements” to avoid disclosing the details behind several of his investments. He has said he would divest a substantial amount of his assets before taking the job.
The global financial crisis dominated Mr. Warsh’s first tenure at the Fed, thrusting him into the middle of discussions about how the central bank should respond to the threat of bank failures, turmoil in financial markets and a painful recession that followed. Mr. Warsh, then the youngest-ever member of the Board of Governors, was initially supportive of the Fed’s efforts to shore up financial markets by buying enormous quantities of government bonds and expanding its balance sheet to ease strains in financial markets and support growth by keeping market-based rates low.
But he soon soured on subsequent efforts to buy more bonds and resigned in protest. That experience has stuck with Mr. Warsh, who has made a smaller balance sheet a pillar of his plans if he takes over as chair.
Mr. Warsh would also be likely to usher in changes to how the Fed communicates its policy views, having expressed misgivings about its strategy of providing so-called forward guidance, or hints about how interest rates may change in the future to guide expectations. He has also suggested that policymakers across the Fed system should speak far less. Mr. Powell held a news conference after each rate decision, or eight a year, and delivered speeches with regularity. Mr. Trump’s pick to join the Fed last year, Stephen I. Miran, often speaks multiple times a week.
“Once policymakers reveal their economic forecast, they can become prisoners of their own words,” Mr. Warsh said in a speech last year. “Fed leaders would be well served to skip opportunities to share their latest musings. The swivel-chair problem, rhetorically waxing and waning with the latest data release, is common and counterproductive.”
What is far less clear is how much Mr. Warsh would heed the president’s demands for lower interest rates. Mr. Trump said he would not pick someone for chair who did not support lower borrowing costs.
Mr. Warsh sought in his opening statement to downplay the costs of a president’s voicing his opinions about rates, saying central bankers must be “strong enough to listen to a diversity of views from all corners, humble enough to be open-minded to new ideas and new economic developments, wise enough to translate imperfect data into meaningful insight and dedicated enough to make judgments faithfully and wisely.”
Earlier this year, many officials at the Fed saw a path to gradually lower rates as the impact of Mr. Trump’s tariffs faded and inflation restarted its slide back toward 2 percent after almost of year of stalling out. The war in Iran — and the energy shock it has unleashed — has upended those forecasts, however, prompting officials to turn wary about lowering rates.
Mr. Warsh will face questions on Tuesday about the economic impact of the war and how it has changed his thinking around the Fed’s ability to lower rates. While at the Fed, he was known as an inflation hawk who often argued against providing policy relief for fear that it could stoke price pressures. He also said the Fed should aspire to engage in rule-based policymaking that stems from formulas that prescribe how officials should set rates based on levels of inflation and employment.
While campaigning to be chair, Mr. Warsh embraced the need for rate cuts, arguing that there was a path for lower borrowing costs because of his plans to shrink the balance sheet, which would lift longer-term rates that then could be offset by lowering short-term ones. He also argued that higher productivity from the boom in artificial intelligence could unleash higher growth without stoking inflation, which could give the Fed more space to lower rates than otherwise would be the case.
In his opening statement, Mr. Warsh made clear, however, that a failure to bring down inflation, which has been stuck above the Fed’s 2 percent target for roughly five years, would strictly be the Fed’s fault, suggesting that he would shoulder the blame if he did not bring it back down during his tenure.
“Inflation is a choice, and the Fed must take responsibility for it,” he will tell lawmakers.
Megan Mineiro contributed reporting.
Dear Mr. Pelley:
I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.
Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.
Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.
Sincerely,
Nick Bilton
Executive Producer, 60 Minutes
The co-founder of Aspiration, Joseph Sanberg, was sentenced to 14 years in prison on Monday after defrauding investors and lenders of over $248 million.
The startup, an eco-friendly digital banking company boasting fossil fuel-free investments, carbon offsets for gas purchases, and a debit card with cash-back benefits for shopping at clean companies, was founded by Sanberg and Andrei Cherny. Cherny left the company in 2022 and has not been charged.
Sanberg, an Orange County native, pleaded guilty to wire fraud in October after being arrested in March last year. Aspiration subsequently filed for bankruptcy and liquidated all of its assets by July.
Sanberg and venture capitalist Ibrahim AlHusseini, who also faces charges, together forged a series of bank statements in order to obtain loans. From 2020 to 2021, the pair forged AlHusseini’s bank statements to show millions of dollars in assets in order to obtain millions of dollars from lenders.
Additionally, they forged a letter from their audit committee stating that $250 million in funds were available, when in reality Aspiration had less than $1 million. The amount of loans defrauded exceeded $248 million.
In 2021, Sanberg artificially inflated Aspiration’s 2021 revenue by $44 million by recruiting 27 fake customers to sign letters of intent pledging tens of thousands of dollars per month for tree planting services. Sanberg himself funded the contracts and used the inflated revenue numbers to obtain more loans.
The charges sparked an NBA investigation into salary cap allegations due to Aspiration’s connections with Clippers owner Steve Ballmer.
Ballmer personally invested $60 million in Aspiration, all of which was lost. He is now the target of a civil lawsuit alleging his participation in the scheme. Ballmer denies the allegations.
The team announced a $300-million sponsorship deal with Aspiration, and Clippers player Kawhi Leonard signed a four-year, $28-million marketing contract with the company, which reportedly performed no duties. The issue has raised concerns about how players are circumventing the NBA’s salary cap.
The team lost the $300-million sponsorship deal and an additional $20 million paid for carbon offset purchases.
Residents in the city of Monterey Park will be the first in the nation to vote on a permanent ban on data centers Tuesday.
If approved, Measure NDC would prohibit data centers within the city limits and could only be overturned by another vote.
Yard signs saying “No Data Center” in English and Chinese with images of dragons line sidewalks in the San Gabriel Valley city.
As a wave of data center opposition sweeps the country, numerous towns and counties across the U.S. have instituted temporary moratoria and other restrictions on the facilities. But only a handful have instituted indefinite bans, and just four other towns have sent related matters to the ballot.
Supporters are hoping the vote will set a precedent for the rest of the region, where residents are fighting proposals in Vernon and City of Industry.
“This is about as permanent a ban as we can get,” said Steven Kung, co-founder of the group No Data Center Monterey Park. “Winning Measure NDC would send a huge message to the rest of the San Gabriel Valley about how residents don’t want data centers.”
The ballot measure emerged from the fight against a 247,000-square-foot center proposed in 2024 by the Australian-owned investment firm HMC StratCap for a residential area in Monterey Park.
The facility would have sat less than 500 feet away from the nearest home and used three times the electricity of the 60,000-person, predominantly Asian American city.
While the developer touted the potential for jobs and tax revenue, residents expressed concerns about noise and air pollution, rising electricity rates and a potential to lower property values.
The company pulled its plans in late March following public outcry and a March 4 city council vote to extend a temporary data center moratorium and place a ban on Tuesday’s ballot.
In a letter to the city council, HMC StratCap said it would pursue a different use for the land and would not engage in a ballot measure fight.
The city council later banned data centers indefinitely, the first in California to do so, said Mayor Elizabeth Yang. But she’s still been out campaigning for the measure with all four other council members.
“If a council puts in an ordinance, a future council can reverse it too,” said Yang. “With the ballot measure, unbanning it is a lot harder because you need the entire city to vote on it.”
The measure proposes the ban “to protect air quality, drinking water resources, and public health” and “prevent impacts to electricity and water rates.”
While California places third in the country for existing data centers with about 300 facilities, it hasn’t been a hot spot in the recent AI-driven data center boom. High electricity rates, expensive land and regulatory hurdles mean that fewer, and smaller, facilities are currently planned than in Virginia, Texas, Georgia, Illinois or Arizona.
“Most of California’s data centers are small by today’s standards,” said Shaolei Ren, an engineering professor at UC Riverside who studies how to reduce the environmental impacts of data centers. “Ten years ago, they would be medium-sized, but the power demand for new AI data centers has increased a lot.”
The average operating data center demands 45 megawatts, according to the Washington Post, while the average planned one would draw 430 MW. The one proposed for Monterey Park would have required about 50 MW at peak demand.
As proposals crop up in SoCal, they’re met with fierce opposition. Montebello, El Monte and Baldwin Park have all enacted temporary moratoria, and Alhambra recently banned data centers as part of a zoning code update. City of Industry, Vernon, City of Commerce and Santa Fe Springs are moving in the other direction, trying to court developers and streamline data center approvals. Community groups are fighting that.
Outside the San Gabriel Valley, residents of Coachella and Imperial County are showing up in droves to protest local proposals.
Matthew Shaw, a volunteer with the Coalition for Responsible Data Center Development, who recently published a report on opposition to AI data centers, said a vote to ban them in Monterey Park “would lead to copycats, partially because so many groups are just opposed to any data center development at all.”
While there is no formal opposition to Measure NDC, some building trades like Ironworker Local 433 supported the Monterey Park data center when it was still live before city council. Those in the data center industry are lamenting the state of public opinion.
“These are multi-billion-dollar assets that are built by multi-trillion-dollar companies. These things will get done,” said Mehdi Paryavi, chairman of the International Data Center Authority. “My biggest problem is that our industry does not invest enough in community engagement.”
Paryavi said towns that seek to limit data centers are missing out on thousands of jobs generated by data center construction, operations and customers, as well as faster artificial intelligence speeds and better performance.
Kung said local community organizers are “looking at the empirical evidence” and seeing a ban as a win.
“We’ve never seen a city that embraces a data center and is like, ‘Look how our quality of life has increased, look how all the revenue has gone into citywide improvements,’” he said. “That just doesn’t exist.”
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