After months of teasing, President Trump announced Friday morning that he would pick Kevin Warsh to replace current Fed Chair Jerome Powell when his term expires in May. Leaks from journalists Thursday evening had already tipped off prediction markets, which had Warsh’s odds at around 91% right before the announcement.
Warsh, 55, is a somewhat surprising choice by Trump. For one, the two disagree fundamentally on monetary policy. The former Fed governor is a known inflation hawk who famously resigned from his post in 2011 out of concern that the Fed was pumping too much money into the system. He’s a classic “hard-money guy” who favors a strong dollar and a tight balance sheet.
Trump, on the other hand, has made his desire for a more dovish chair well known, having browbeaten and threatened Powell throughout his term over what he viewed as excessively high interest rates. The president believes in a weaker dollar and looser monetary conditions to buoy business investment and support both foreign and domestic expenditure.
But a quality in a Fed chair even more desirable than dovishness, as Trump has suggested recently, is loyalty. At the World Economic Forum meeting in Davos, Switzerland, Trump bemoaned Fed chairs who say “everything I want to hear” until they actually get the job—then, “all of a sudden: ‘Let’s raise rates a little bit.’”
“It’s too bad—sort of disloyalty—but they’ve got to do what they think is right,” he added.
With Warsh, the president might be betting the opposite happens: that someone who is theoretically ideologically opposed proves more flexible in practice.
Warsh has the right kind of pedigree for Trump. He was a young Wall Street executive turned rebellious Fed governor and now runs the gamut of prestigious think tanks. He also happens to have family ties to the president.
His wife, Jane Lauder, is a billionaire granddaughter of Estée Lauder, the businesswoman behind the skin care brand that bears her name. Her father is Ronald Lauder, who has known Trump since the two were undergraduates together at the University of Pennsylvania’s Wharton School. Trump and Lauder have remained close friends and confidants ever since.
Lauder is widely credited with sparking Trump’s interest in acquiring Greenland back in 2020, and has continued to advise him on the issue. The Guardian reported earlier this month that Lauder has acquired commercial holdings in Greenland, and is part of the consortium seeking access to Ukrainian materials.
Per local reporting in the Arctic press, Lauder is a participant in an investor group called Greenland Development Partners, which backs water, energy, and infrastructure projects in the Arctic territory. He has also reportedly invested in a small bottled-water company called Greenland Water Bank.
“Trump’s Greenland concept was never absurd—it was strategic,” Lauder wrote in an op-ed for the New York Post titled “I’m a Greenland expert—these 3 paths can make it America’s next frontier.”
“I have worked closely with Greenland’s business and government leaders for years to develop strategic investments there, even as the Biden administration, unsurprisingly, ignored and underestimated its vast opportunity,” Lauder wrote.
In addition to being the sole heir of the Estée Lauder Companies, Lauder has been World Jewish Congress president and was previously named by Ronald Reagan as ambassador to Austria.
Lauder also appears deeply attuned to Trump’s way of thinking. Speaking to a crowd at a Jewish National Fund for Arizona breakfast in 2017, he described Trump as a populist figure elites fail to understand.
“The Donald I know is very smart,” Lauder said, according to the Arizona Republic. “He’s talking for the Americans, and the question is why a company should be allowed to close its doors, put 2,000 or 3,000 people out of work who will probably never find a job again, and move to Mexico without any consequences.” Of course, how much Lauder’s close relationship with Trump influences his son-in-law’s views is unclear. But Warsh himself has recently dampened his hawkishness, arguing in a Wall Street Journal op-ed that artificial intelligence could prove a significant deflationary force through productivity gains, potentially creating room to lower borrowing costs.
In the same op-ed, he also echoed Lauder’s praise of Trump as a man of the people.
“Perhaps the most underappreciated characteristic of the Trump administration is its admiration for individual achievement,” Warsh wrote. “Treating people based on their merits rather than their status or sensibilities is the renewed American credo.”
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Eva Roytburg