STEVE INSKEEP, HOST:
Let's talk through this appointment now with David Wessel. He's the author of a book called "In Fed We Trust." He has followed the Federal Reserve for decades, and we've been glad to have his insights over the years. David, good morning.
DAVID WESSEL: Good morning, Steve.
INSKEEP: What does this appointment make you think about?
WESSEL: It makes me wonder which Kevin Warsh will be chairman of the Fed. As Scott pointed out, he has tended to be on the hawkish side. He's been very critical of the Fed's buying of bonds, known as quantitative easing. But in recent years, as he's been auditioning for this job - which he's been doing for the last decade - he's talked a lot about how AI is going to make it possible for the economy to grow faster, and he sounds like he's singing from the Trump songbook. But once you get confirmed, there's not much the president can do except lecture you. So we'll see which Kevin Warsh shows up.
INSKEEP: I want to make sure I understand what you're saying. When you say he was hawkish in the past, do you mean to say that he was worried about inflation in the past?
WESSEL: Yes. He - among Fed policymakers, he tended to worry more about inflation than some of his colleagues. It turned out to be misplaced fears going into the - when he was on the board. But in recent years, he's blamed the Fed quite a bit for doing the wrong thing and hurting the economy. He's promising a shake-up. He's talking about regime change. And so I think he'll have to do something to show President Trump that he actually meant what he said. But the real question is, what will he do about interest rates over his term as Fed chair, if he's confirmed, which is four years.
INSKEEP: I want to talk about the Fed's independence here. You said that once he is confirmed, if he is formally nominated and then confirmed, Trump can't do much to him under the current theory of power, although there is a Supreme Court case about this. But the president has a different idea. His idea is that he should tell everyone what to do, and they should salute and do it. And he's choosing this guy. Can we imagine Kevin Warsh calling up the president and asking, how would you like us to handle interest rates today?
WESSEL: No. I don't think he'd do that. I mean, for one thing, Kevin Warsh has been at the Fed. I think he believes in the Fed as an institution. The question is, how will he - will he do what Jay Powell has done? - show strong backbone and say, I'm going to do what's right, even if the president doesn't like it. Remember, the president thought Jay Powell would do his bidding, and he's been complaining about it for the last several months that he didn't think Jay Powell was doing what he wanted. So we'll see. I think the question is, has Kevin Warsh adopted Trump's view of the economy, that rates should be lower, that artificial intelligence is going to be such a disinflationary force that the Fed can lower interest rates? One thing I'm sure he'll do is he'll side with the current vice chair for supervision, Miki Bowman, in easing the regulation of banks. That's something he's been quite clear about.
INSKEEP: I want to ask about another aspect of this. Jay Powell is still the chairman of the Federal Reserve for now and for several months to come and is not going anywhere. But here is Kevin Warsh, who's been named, who has a background at the agency, who is well known. Is there some sense in which he might almost become a shadow Fed chair who is listened to more closely than the actual Fed chair?
WESSEL: I don't think so. I mean, look, the Fed has pretty much said it's going to be on hold for a while. People will be wondering not what J Powell's going to do at the next Fed meeting, but what Kevin Warsh will do once he takes over if he's confirmed in June. So I don't think that's really a big issue.
INSKEEP: OK. Again, we're talking about Kevin Warsh, President Trump's nominee to be the chairman of the Fed, whom he described as central casting for the role. We've been listening to the central casting person for analysis of the Fed, David Wessel of the Brookings Institution. David, thanks so much.
WESSEL: You're welcome.
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