Bessent met this week with Warsh, Lindsey, Bullard as Fed chief search continues

The search for the next Federal Reserve chair is well underway, with Treasury Secretary Scott Bessent taking the lead in meeting with potential candidates on President Donald Trump’s shortlist. Bessent has recently held meetings with former Fed officials Lawrence Lindsey, Kevin Warsh, and James Bullard, all of whom bring valuable experience to the table. Lindsey and Warsh have served as governors, while Bullard was the president of the St. Louis Fed.

According to sources, Bessent will wait until the end of next week, when the blackout period surrounding Federal Open Market Committee meetings is over, to interview sitting Fed officials. The goal is to expand the list of candidates that Trump is considering, which currently includes Warsh, National Economic Council Director Kevin Hassett, and current Governor Christopher Waller. Bessent is also considering a broader group of 11 economists, including former and current central bankers, as well as market strategists.

In addition to conducting candidate interviews, Bessent is advocating for reforms within the Fed. He is particularly interested in seeing the central bank gradually reduce its massive bond portfolio, which currently stands at $6 trillion in Treasurys and mortgage-backed securities. The key, according to sources, is to do so in a way that does not disrupt the markets or the economy. Bessent is also looking to reduce the Fed’s economic footprint.

The news of Bessent’s involvement comes at a time when the Fed is under close scrutiny from the White House. Trump and other administration officials have been urging the Fed to cut interest rates, a move that has not been made since December 2024. It is widely expected that the FOMC will approve a quarter-percentage-point reduction at its upcoming meeting.

In a recent opinion piece in the Wall Street Journal, Bessent laid out his vision for the Fed, criticizing what he calls “gain of function” activities. He believes that the Fed has strayed from its core objectives of maintaining low unemployment and inflation, and that its current toolkit is too complex and uncertain.

Looking ahead, Chair Jerome Powell’s term is set to expire in May 2026, and while he could potentially stay on as governor, it is likely that he will be replaced as chair. The Senate is also expected to vote on nominee Stephen Miran for a Board of Governors vacancy. Additionally, Trump’s efforts to remove Governor Lisa Cook on accusations of mortgage fraud have been met with legal challenges.

Overall, the landscape at the Fed is poised for significant changes in the coming year, with Bessent at the helm of the search for the next Federal Reserve chair.