Source: Jinshi Data

According to informed sources, advisers to Trump are considering how to restructure the leadership of the Federal Reserve, including promoting Fed Governor Bowman to become the next Vice Chair for Supervision.

This news came after Barr announced he would resign from the position of Vice Chair for Supervision but would retain his seat on the Federal Reserve Board. Trump's advisers have also started drafting a list of potential candidates to replace Powell, whose term will end in May 2026, and they are closely monitoring current Fed officials' comments on interest rates to decide whether to add or remove names from the candidate list.

Although Trump chose Powell as chair during his first term, he has repeatedly expressed dissatisfaction with that decision.

According to those familiar with the matter, potential candidates under consideration by Trump's advisers to replace Powell include: Kevin Hassett, currently appointed as the Director of the White House National Economic Council; Larry Lindsey and Marc Sumerlin, former officials of the George W. Bush administration; former World Bank President David Malpass; former Fed official Kevin Warsh; and Fed Governor Bowman.

Informed sources say that Fed Governor Waller was previously viewed as a candidate for Fed Chair, but after he supported a 50 basis point rate cut last September, he may no longer be seriously considered. Last year, Trump stated that a larger-than-usual rate cut implemented by the Fed just weeks before the presidential election was a 'political move to keep someone in power.'

Cleveland Fed President Harmack has also been rumored to be a possible candidate for a seat on the Federal Reserve Board during Trump's second term.

Bowman, Hassert, Summerlin, Waller, and Harmak declined to comment, while Walsh, Malpass, and Lindsay did not respond to requests for comments. The Trump transition team also did not immediately respond to requests for comments.

Barr's decision limited the choices.

Barr decided to retain his seat as an ordinary member of the Federal Reserve Board until 2032, which means Trump cannot nominate new candidates from outside the Federal Reserve to fill Barr's regulatory vice chair position. Instead, he must choose a member from the Federal Reserve Board to serve as regulatory vice chair.

Trump said at a press conference on Tuesday that Barr's successor would be announced 'soon.'

The next vacancy at the Federal Reserve is not expected to occur until January 2026, when Federal Reserve Board member Kogler's term expires.

Among the four current Federal Reserve Board members who could be promoted to vice chair, two were appointed by Trump: Bowman and Waller.

Bowman was nominated to the Federal Reserve by Trump in 2018 while she served as the state bank commissioner of Kansas.

She has given extensive speeches on bank regulation, often addressing audiences at community banks. She strongly opposed Barr's proposal on bank capital requirements, which is part of the Basel III agreement aimed at preventing bank failures and financial crises, arguing that increased capital requirements could suppress lending, especially when the banking sector is healthy. She advocated for better supervision of banks.

Bowman also criticized the Federal Reserve's handling of the Silicon Valley Bank and other bank failures in 2023.

Although most of Bowman's public speeches have focused on the banking sector, she has also become one of the more hawkish monetary policymakers at the Federal Reserve, often expressing concerns about inflationary pressures. She became the first governor in 19 years to cast a dissenting vote at the FOMC in September last year, opposing the unconventional 50 basis point rate cut and supporting a cut of 25 basis points.

Representative French Hill stated earlier this week, "Bowman has done an excellent job as a Federal Reserve governor," suggesting it would be a good decision if Trump nominated her for the role of Vice Chair for Supervision.

Harmack was appointed President of the Cleveland Fed last year, after spending thirty years at Goldman Sachs in various roles related to institutional bonds, interest rates, and repo trading. She also served as the Chair of the Treasury Borrowing Advisory Committee, which is made up of Wall Street dealers and debt investors, providing consulting services to the Treasury.

Potential Conflict

Barr said on Monday that he chose to resign from his position as the top bank regulator at the Federal Reserve because he concluded that even fighting against the incoming Trump administration and successfully remaining in office would result in losses for the Federal Reserve.

He stated, "According to my lawyers and the Federal Reserve's General Counsel, I would win legally if this turns into litigation. However, even without litigation, or even if there is and I win, it would cause a huge disruption, which in my view is not a wise course of action."

编辑/jayden