Weekly Commentary: Kevin Warsh And Regime Change

2026-01-31 02:40:58 ET

I admired Kevin Warsh during his term as Federal Reserve governor (2006 to 2011). While young, he was more the traditional central banker operating within an experimental Bernanke Federal Reserve. He has been pilloried for his inflation focus in the months leading up to the 2008 crisis. The Fed aggressively slashed rates despite elevated inflation, an easing of financial conditions that spurred ongoing "terminal phase" Bubble excess and deepening systemic fragilities. Warsh's inflation focus was justified.

Kevin Warsh has also been criticized for his cautious approach to QE. While working closely with Chair Bernanke to implement the Fed's 2008 Wall Street bailout, he argued in September 2009 that the Fed should begin reversing extraordinary crisis-period liquidity injections. He pushed back in 2010 against Bernanke's move to restart QE.

From Ben Bernanke's "Courage to Act": "Kevin Warsh had substantial reservations... He had supported the first round of securities purchases, begun in the midst of the crisis. Now that financial markets were functioning more normally, he believed that monetary policy was reaching its limits, that additional purchases could pose risks to inflation and financial stability…"...

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