Bond Market Dawn | What Lies Ahead for the Federal Reserve Chair Transition?

A report on U.S. President Trump’s nomination of Kevin Warsh as Chair of the Federal Reserve has, due to opposition from senators, effectively hit a stalemate, confirming that the confirmation process faces uncertainty. Since 1934, there have been gaps during transitions of Federal Reserve Chairs, but such occurrences have been relatively rare in history. In March, Powell said he currently has no intention of leaving the Federal Reserve Board. With his term as Chair set to end on May 15, there is a possibility that Warsh’s nomination could be delayed and that Powell would serve as “acting chair” to preside over meetings. If the U.S. Department of Justice withdraws its criminal investigation into Powell, then the process for Warsh’s nomination could possibly move forward.

▍ U.S. President Trump’s nomination of Kevin Warsh (Kevin Warsh) to serve as Chair of the Federal Reserve has effectively fallen into a stalemate due to opposition from senators, and it has confirmed that the process faces uncertainty.

On January 30, 2026, Trump announced the nomination of Warsh as the next Chair of the Federal Reserve, and on March 4, 2026, he formally sent the nomination letter to the Senate. The nomination was immediately met with resistance from multiple sides. Within the Republican camp, Senator Tom Tillis (Thom Tillis), a member of the Senate Banking Committee from North Carolina, became the most critical source of opposition. Tillis stated clearly: until the Department of Justice’s criminal investigation of the sitting Chair Powell is resolved fully and transparently, he will oppose all Federal Reserve nominations, including the Chair position. He characterized this as a principle stance to maintain the independence of the Federal Reserve, and said that the criminal investigation into Powell itself constitutes a political threat to the Fed’s independence rather than being based on reasonable criminal evidence. Another Republican member of the Banking Committee, Senator Kevin Cramer (Kevin Cramer) of North Dakota, also said he hopes the Powell-related investigation can be wrapped up as soon as possible. Although his stance is more moderate than Tillis’s, it also adds certain variables to the process.

▍ In the Democratic camp, more Senate Democratic members have also expressed opposition to Warsh’s nomination, citing dimensions such as policy positions and the Federal Reserve’s independence, and the nomination has thus been met with blockages.

Based on a Caixin report, on January 30, Elizabeth Warren (Elizabeth Warren, a Democrat), the top Democratic member of the Banking Committee and a senator from Massachusetts, said that after the 2008 financial crisis, Warsh chose to help Wall Street rather than millions of unemployed Americans, and indicated that he had already passed Trump’s loyalty test. She also explicitly called for no progress on any Federal Reserve nomination until Trump’s case of “political suppression” against Powell and Federal Reserve Governor Cook is dismissed. Senator Mark Warner (Mark Warner, a Democrat) voiced his views from the perspective of Federal Reserve independence, emphasizing that the Fed’s original design is to insulate it from political interference. He said that once Fed independence is shaken, it will directly affect borrowing costs and overall economic stability, causing a real hit to ordinary households.

▍ Since 1934, there have been gaps during the transition of Federal Reserve Chairs, but such cases are relatively uncommon in history.

The terms of members of the Federal Reserve Board are 14 years, while the term of the Chair is only 4 years, and the Chair must be selected from among the sitting Board members. This institutional arrangement means that the end of a Chair’s term does not necessarily lead to the end of their status as a Board member—when the Chair’s term expires but their Board term has not yet ended, the person may legally continue to serve as a Board member. Since 1935, there have only been two instances of gaps in Federal Reserve transitions: in 1948 and in 1978.

▍ The transition of the Federal Reserve Chair in 1948 involved a clearly evident gap period. The official term of then-Chair Marriner S. Eccles expired on January 31, 1948.

Although the U.S. President at the time, Truman, had decided in late January 1948 that Thomas B. McCabe would succeed him as Chair of the Federal Reserve, Thomas B. McCabe was not then a sitting member of the Federal Reserve Board. Under the Fed’s system, the Chair must be drawn from among current Board members. This institutional constraint meant that the handover process could not be completed in sync when Eccles’s term ended. McCabe first had to be confirmed as a Federal Reserve Board member through nomination by the president, Senate hearings, and a vote, and then formally appointed by the president as Chair. It is also worth noting that the delay in confirmation was not only due to McCabe not being a sitting Board member. More importantly, according to a report by The New York Times, during its consideration, the Senate had questions about the nominee for Federal Reserve Chair, adding a review with an investigative nature. On the one hand, in the hearings the committee focused on pushing and challenging issues related to poor oversight of how wartime overseas surplus materials handled during his tenure as chairman of the Overseas Liquidation Commission. On the other hand, the Senate worried that Thomas B. McCabe supported banking groups as it pushed forward antitrust legislation, and therefore held multiple hearings and reviews to confirm whether McCabe opposed monopolies in banking organizations. It was not until mid-April 1948 that Thomas B. McCabe obtained Senate approval to become a Board member and to be confirmed as Chair of the Federal Reserve. During this transition period, Eccles’s 14-year term as a Board member had not yet ended. He remained in office in his capacity as a Board member and fulfilled the duties of acting chair, ensuring that monetary policy decision-making and day-to-day operations remained continuous and stable. After McCabe took office, Eccles continued to serve as a Board member until 1951.

▍ In early 1978, the transition of the Federal Reserve Chair also was not completed before the end of the term of Chair Burns.

After Arthur Burns’s term ended on January 31, his successor, G. William Miller, only completed the full confirmation procedures on March 8. As in the 1948 case, although U.S. President Jimmy Carter had already nominated William Miller, then chairman of the board and CEO of the Deltec company, on December 28, 1977, Miller was not then a sitting Federal Reserve Board member, and his Board appointment process had to be completed first. In addition, since Miller came from the business world and lacked direct experience with monetary policy, the Senate was even more cautious in reviewing his business background and compliance matters. Based on a report by The Harvard Crimson, the Senate questioned Miller’s personal integrity based on the Deltec company’s alleged bribery of the Iranian regime (even though he denied knowing). Multiple factors together extended the appointment timeline, resulting in this Chair transition having a gap of more than one month. Ultimately, Miller successfully defended himself at the hearing by proving there was no bribery; on March 8, 1978, the committee voted to approve his appointment. During the transition period, the outgoing Burns, whose term had ended, continued to carry out the duties of chair and left the Federal Reserve in the month Miller took office without continuing to remain as a Board member.

▍ At present, Warsh’s nomination has fallen into a stalemate, while Powell has said he currently has no intention of leaving the Federal Reserve Board; uncertainty about the direction of monetary policy in the subsequent Federal Reserve leadership transition has increased.

While Warsh’s nomination is being blocked in the Senate, Powell said at the March monetary policy meeting that he absolutely had no intention of leaving the Board until the investigation is ended in a way that is fully transparent and thoroughly completed (i.e., implying that Powell would continue to serve as a Board member before the criminal investigation ends). As for whether Powell would continue to serve as a Federal Reserve Board member after his term as Chair ends and after the investigation is concluded, Powell said no decision has been made yet. At present, there is the possibility that after Chair Powell’s term ends on May 15, Warsh’s nomination could be delayed and that Powell would serve as “acting chair” to preside over meetings. If the U.S. Department of Justice withdraws its criminal investigation into Powell, then the process for Warsh’s nomination could potentially see progress at that time.

▍ Risk factors:

The U.S.-Iran conflict situation exceeds expectations; changes in the global economy exceed expectations; Trump administration policies exceed expectations; U.S. monetary policy exceeds expectations; other geopolitical risks exceed expectations, and so on.

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Editor: Shi Xiu-zhen SF183