How Scott Bessent could help Kevin Warsh get confirmed as Fed chairman

Treasury Secretary Scott Bessent is expected to help Kevin Warsh walk the tightrope as the incoming Federal Reserve chairman – pursuing a “hawkish” approach to monetary policy while also catering to President Trump’s easy-money agenda, On The Money has learned.That’s the consensus of Wall Street executives with ties to the Trump White House who know key players in the MAGA world – including Bessent and Warsh. One source, an economist with ties to the Trump economic team, expects Warsh to lean heavily on Bessent – not just to get through the Senate confirmation process but also to navigate a mercurial president and his demands for lower short-term rates that the Fed controls. That battle of short-term rates – recently fought with the president badgering and name calling Fed Chairman Jerome Powell – led to Warsh’s appointment.It also will be front-and-center during his confirmation hearings where senators from both parties will demand some indication that Warsh won’t be a Trump puppet. Warsh is a so-called hawk who believes the easy money of the past Fed chairs has led to elevated prices that are a tax on the working class.

He also doesn’t need to anger the man who appointed him – and who could make his job a living hell if he doesn’t cut rates.Bessent is seen as playing a key role in helping Warsh walk that fine line.“Warsh will absolutely keep a dialogue going with Trump, and I think that’s great, because you don’t need what we have now, a president constantly attacking the Fed chair and making it difficult for him to do his job,” this person said.“But Bessent is there as well to smooth things over and he and Warsh are friends.”Indeed, my sources say Bessent was key in getting Warsh the Fed nomination.

Both are longtime friends who share a common mentor in legendary investor Stan Druckenmiller. Bessent was one of “Druck’s” top traders at the hedge fund headed by George Soros, which famously shorted the pound sterli...