Kevin Warsh touts 'regime change' at Fed and calls for partnership with Treasury

Former Federal Reserve Governor Kevin Warsh, reportedly on President Donald Trump's short list to lead the institution, called Thursday for sweeping changes on how the central bank conducts business and suggested a policy alliance with the Treasury Department.

“We need regime change in the conduct of policy,” Warsh said during an interview on CNBC's “Squawk Box.” “The credibility deficit lies with the incumbents that are at the Fed, in my view.”

Principal among those holdover officials is Chair Jerome Powell, who repeatedly has incurred Trump's wrath and is certain not to be reappointed when his term expires in May 2026, if attempts aren't made to remove him before then.

Warsh is considered one of three or four finalists to take over, and he expressed multiple sentiments in line with what Trump wants from the Fed. The president has demanded the central bank cut its benchmark overnight borrowing rate and has urged Powell to resign for not pushing for cuts.

Warsh's comments indicate he could be at loggerheads not only with the way Powell has led the Fed, but also with holdover members who would be in place should he be put at the organization's helm.

“Their hesitancy to cut rates, I think, is actually ... quite a mark against them,” Warsh said. “The specter of the miss they made on inflation, it has stuck with them. So one of the reasons why the president, I think, is right to be pushing the Fed publicly is we need regime change in the conduct of policy.”