The Committee Reacts to Kevin Warsh's Testimony 4/21/26

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And then let's focus on interest rates and inflation so we can benefit all Americans. That if we take interest rates down, that benefits all Americans. You said it gets into the nooks and crannies. That if we get inflation under control, that is how we benefit all Americans. And the size of the balance sheet has only benefited some Americans. So what you're really about is trying to change a policy at the Fed that has really benefited, under the last administration, people who have lots of money. Actually, not just the last administration, people, the previous administrations. But you also want to make sure we get off of the inflation. I mean, during the Biden administration, we saw four years in a row of declining real wages for American households. And what you want to do is get that inflation under control so that all American households benefit. Is that fair? That is fair. I'm going to paraphrase former chairman Paul Volcker, where he said something along the following lines. You would need to have a PhD from an elite institution to believe that inflation doesn't have something to do with money. Okay, great. Real briefly, I've only got a few seconds left here, but I'm going to hit upon it, switch topics on you real briefly. Chairman Powell, Secretary of Business, met with leaders of our largest banks recently to talk about advanced AI models like Mythos from Anthropic to identify banking vulnerabilities. It's apparently very good at finding those vulnerabilities. When confirmed, what will you do to modernize the Federal Reserve's internal risk assessments, tabletop or scenario planning exercises to ensure that we can anticipate and defend against the type of emerging risks that potentially models like Mythos could present if used in the wrong hands? I have about 20 seconds to answer that. 20 seconds. Senator, a lot is the short answer. The 15-second answer beyond that is the pace of change in these technologies is accelerating. AI, which I think of really as American ingenuity, gives America a huge head start relative to our competitors around the world. But it's not without real risks and real challenges. And a forward-looking, reform-oriented central bank needs to be on the front end of it. Great. Thank you very much. I look forward to your leadership. Senator Gallego. Thank you, Mr. Chair. How are you? In a 2019 interview with Bloomberg, you said a monetary policy is important not for a decision it makes, but for reasons it gives for the explanations. Mr. Warsh, the federal open market committees or that the Fed sets U.S. policy through interest rate decisions at those meetings, do you commit to maintaining the current practice of holding a meeting at least once every eight weeks? Yes or no? Senator, by statute, as we talked about in your office, I believe the statute requires a minimum of four meetings, but four is not enough. So having more meetings than that is appropriate. But I've not even begun to look at the meeting schedules for 2027 and beyond. of course, subject to confirmation. So then do you commit to holding a press conference, at least on the day of the FOMC meetings? Senator, right now, press conferences are held periodically. If you ask me my true personal opinion, right now, Fed chairs and other central bankers around the FOMC, they speak quite frequently. There is no lack of transparency. But I would say this, I think truth-seeking is more important than repetition. If one has a press conference, one wants to deliver some important news. Perfect. If you follow up on that, then would you commit to taking questions at those press conferences? If a press conference were held, I think it would be incumbent to hear what the reporters of the day had in mind. Thank you. Our personal meeting regarding this was very enlightening. Earlier today, you said to Senator Kennedy that President Trump never demanded you to cut interest rates in your job interview. Is that your sworn testimony? That is, Senator. Okay. Well, someone here is lying then, because it's either you or President Trump. Because in an interview with the Wall Street Journal of December 12th, President Trump confirmed that he pressed you on your commitment to support interest rates cuts. And I quote, during a 45-minute meeting with Warsh on Wednesday at the White House, the President pressed Warsh on whether he could trust him to support interest rate cuts if he were chosen to leave the central bank. According to people familiar with the meeting, Trump in the general interview confirmed that repeating. Mr. Chairman, I'd like to enter for the record the Wall Street Journal article December 12th. Trump says he's leaning towards Wall Street or has it to lead the Fed. So, you know, this brings up an issue of credibility at this point. Who's lying here? Is it you or the president? Because the president confirmed that he did ask you to cut interest rates. Senator, there's, of course, a third alternative. you cite a couple of reporters for a leading financial newspaper. I recall reading that story at the time. Did you ask a correction? I think those reporters either need better sources or better journalist standards. Did you ask for a correction? There are things in the newspaper, Senator, I see all the time that don't strike my ear as correct. So is in your opinion that the president then is lying when he said he did not ask you? I can only repeat to you, Senator, what I said to several of your colleagues. So you did not. You right now are under a sworn testimony are saying just right now that the president of the United States in that job interview did not ask you to cut interest rates. The president never asked me to commit to interest rate cuts at any particular meeting over the period of my tenure at the Fed. He didn't ask for it. He didn't demand it. He didn't require it. And nor would I have ever done so. So if these reporters come back and say they do another follow-up on this and they confirm what they heard, what will your response be? Well, my response would be what I suggested to you a few moments ago. As I read that story in real time, I remember thinking they either need better journalistic standards or better sources. So, you know, here's my problem, Mr. Chair and colleagues. You know, and Mr. Warsh, I think you're incredibly qualified. A lot of us are actually worried about the integrity of the Federal Reserve. We're worried about what this means for the economic markets, and we're worried about what this means for inflation. We're worried about your independence, and now we're hearing direct contradictions, whether or not you were directly asked by the president to cut interest rates, and you're saying no, and he's saying yes. And I think for a lot of us, there's a question now of credibility. And I think there's a real reason why many of us are not voting no. As a matter of fact, until you verbally spoke to Mr. Kennedy and answered his question, he did not ask, the president did not ask you to cut interest rates. This was not going to be brought up. So there's definitely right now a true question about who is lying here. It's either you or it's the president. I yield back. Senator, if I might respond. Certainly. Thank you. I take my responsibility to be an independent leader of the Federal Reserve very seriously, if confirmed by this body. I take the integrity of the office and my personal integrity very seriously. And I stand by every word I said. The president never asked me to commit to any such thing, nor would I ever do so. Mr. Banks. No, sir. Thank you, Mr. Chairman. Governor Warsh, congrats on your nomination. As we spoke about during our meeting in my office, I strongly support your nomination and look forward to voting for you to be the next chairman of the Federal Reserve, and it can't happen soon enough. One policy area that we strongly agree on is the threat that China poses to America's economy. In fact, you've written publicly that China is deliberately positioning its financial system to rival U.S. leadership and actively working to elevate its currency on the global stage. Can you talk for a minute about how the Federal Reserve reinforces the strength of the U.S. dollar as the world's reserve currency in the face of that challenge? Sure. Senator, it's great to see you again. We talked about some of these issues of the G2 rivalry, the rivalry between the U.S. and China in your office. if confirmed as chairman of the Federal Reserve, I will then have to say that it's the Treasury Secretary's business to talk about the dollar. It's the Fed Chairman's business to talk about interest rates. But I think I can say this quite comfortably. The dollar is the linchpin of the global economy. The United States and the Federal Reserve is a beneficiary of the strength of the The U.S. financial system is the most important financial system in the world, and the central bank's been charged with really important responsibilities in overseeing it and supervising it. There are risks to the U.S. position in the world, including economic. The economic statecraft agenda led by Secretary Besant, Secretary Rubio, is an important one. On that, the Fed will play a supporting role in ensuring that the financial system is as safe as it can be and work with them because it's outside of the conduct of monetary policy to ensure the U.S. is on its front foot and in a position of strength during this period of rivalry between the U.S. and another nation around the world. What are some of those? I understand the role of the Treasury Department versus the Fed, but what are the most important steps that the Fed can take to reinforce confidence in the U.S. dollar? Senator, deliver stable prices, Senator. Deliver an economy that improves from here even further, where real take-home pay moves up, where inflation falls, and the U.S. economic growth potential is the best in the world. I mentioned earlier, Senator, something that I really do believe. AI is a testament to American ingenuity. The United States is the best positioned country in the world to take advantage of it so that the U.S. economy, U.S. workers benefit from it. The U.S. is in a better position than anyone else, but it's filled with challenges, geopolitical challenges, technology challenges. So the sooner that we can hit the ground running on reform agenda, the better. You wrote in an op-ed in 2021 in the Wall Street Journal that I recommend everyone reads. It's one of the reasons that I wholeheartedly support you because of what you, it says a lot about you in this op-ed. But you talked about how the PRC is actively promoting its digital yuan currency with the explicit goal of creating an alternative payment system that sidesteps U.S. sanctions. You've been very clear that China is not playing by the rules. China is buying over 80% of Iran's sanctioned oil in Chinese currency through Chinese banks, completely outside SWIFT. The Iranian government says it is charging ships to transit the Strait of Hormuz and collects payments via crypto and Chinese currency. What tools does the Federal Reserve have to defend the dollar's role as countries route payments through the Chinese financial systems to do business with Iran and other adversaries? Yes, Senator, thank you. As we talked about before, monetary policy is independent. But outside of monetary policy, the Federal Reserve can be working hand in hand with the rest of the government. The Federal Reserve is independent inside of government, not independent of government. What the U.S. can do with respect to the dollar is have a more robust payment system. The Fed has a number of payment systems that most financial participants in the world use. I would say they all are in need of substantial reform. There's a system called FedNow, which some describe as Fed yesterday. There's a series of new technologies that the Fed needs to oversee and needs to architect so that the payment system in the U.S. is the safest, most efficient, most capable in the world. Otherwise, we'll be losing to adversaries around the world in being the linchpin of the global economy. Thank you. Your leadership is so important, and it's important right now. We need you on the job right now, not later right now. So I look forward to voting for you quickly and seeing you confirmed and getting you on the job. With that, I yield back. Thank you, sir. Senator Blunt-Rochester. Thank you, Mr. Chairman and Ranking Member Warren. Also, thank you, Mr. Worf, for taking the time also to meet with me earlier this week. I share many of the concerns of different committee members about us kind of putting the cart before the horse. And in one regard, it is the whole issue of independence of the Fed. And I know you have made commitments both in your testimony and here today with us in the process of watching the president try to fire Chairman Powell as well as Governor Lisa Cook. It really raises a lot of red flags for us. Even Justice Kavanaugh said that no president has fired a sitting governor in the 112 year history of the Fed, which was structured to be independent of day politics and that it would weaken if not shatter the independence of the Federal Reserve There are a lot of questions here today as well about both ethics and whether or not all the paperwork is in and even Senator Warren's question about, you know, selling of the assets and whether they will be transparent is something that's important, again, to ensure confidence. And so I shared some of those concerns with you in person when we met and I share them here for the record. I did have a question. I want to focus on AI, but I did have a question beforehand that I wanted to clarify. You mentioned your desire for reform as well as regime change at the Fed. Could you just clarify, you didn't mean removing the regional bank presidents whose five-year terms were just restated and re-upped in December? Senator, I meant policy regime change. Got it. So for the record, we're not looking at regime change for those 12 board presidents. I want to jump to AI because it's probably one of the number one issues that I hear about in my state. I'm former secretary of labor in Delaware. This is something that I asked Chair Powell when he was here as well about. A lot has happened in a year. And one of the things you have characterized this as the most productivity enhancing wave of our lifetimes, past, present, and future. You have described it as structurally disinflationary and that central bankers must make a bet. I'm in the camp with Senator Kennedy. I'm concerned about us making a bet on something that we know. You've said it. Chairman Powell said it. We don't have the data to even understand yet. And so my first question is, what happens for policy if that surge doesn't materialize as expected? Yeah. So Senator, I enjoyed our discussion. I think the essential elements of a new policy for the Federal Reserve is to get access to better data and to dig deeper into the productivity possibilities that can come out of this new investment wave. Today, we call it artificial intelligence. Two years from now, we're going to call it business capex. And three years from now, we're going to call it just ordinary business. I think it has two important effects on the conduct of policy. I don't claim to have perfect knowledge of how any of these are going to go, but I do have an intuition the pace of change is accelerating. I'm sorry, Senator, go ahead. I was just going to ask, how much of your view on interest rates depends on those productivity gains showing up quickly? Yeah, so I think it has two elements. One is the increase in capital expenditures to build data centers and the rest. That will have an effect on demand. That will increase demand, my guess is, a few tenths of 1%. But on the supply side of the economy, to increase the potential output of the economy, that could be considerably bigger. We don't know that. We can't bank on that. But considerable work needs to be done by the Federal Reserve in evaluating this productivity wave. As I said before, monetary policy works with long and variable lags. So you have to make some informed judgments. And unlike other people in office, if the judgments are wrong, you've got to call the flag on yourself and correct them. Well, I think there's been a lot of conversation here about concerns that in your record, in your history, you have been hawkish on inflation rates and keeping them low. And now we're looking at AI. What I don't want to see is us use AI as an excuse for making good policy. Too much depends on it. Too many families' lives depend on it. And in our conversation, I also talked about the fact that I know Wall Street is going to be okay. but who we're concerned about as well is Main Street. Thank you. I yield back. Thank you, Senator. Senator Kramer, you were recognized. Thank you, Mr. Chairman. Thank you, Mr. Walsh, for being here. Thanks for stepping in the gap. Thank you. In fact, I'm a little bit curious as to why you even want to do this. I don't know. I think I don't know. Anyway, congratulations on the choice. By the way, with regard to independence real quickly, I find it curious. In fact, I've often found it curious that people expect somebody who's appointed by an elected official has to be confirmed by 100 other elected officials would somehow not have a philosophy. That's what I hear sometimes. Like, why don't we, speaking of AI, we should just have an AI Fed chairman. That way it'd be completely neutral. other than the people that put all the information in the algorithms. Anyway, that said, I think we should not forget that it would be common for a president who believes that interest rates should be lower to want to nominate somebody who has expressed that maybe interest rates could be a little lower as opposed to the quid pro quo that's being accused of today. So I'm just grateful you're willing to do it. By the way, the other thing about independence that strikes me with regard to the Fed, do you have any idea how often an interest rate decision by the Fed is a 12 to 0 or a 10 to 0 vote? Do you have a sense of it? I do, Senator. I'd say over the last 15 years, decisions have been unanimous or near unanimous. As I said to one of your colleagues earlier, I prefer clean memos and messier meetings, and there's nothing wrong with the divergence of opinion. and these are very hard calls. Thank you. I don't know when diversity became a bad thing in a room of thinkers, particularly with staggered terms. The other thing, none of this was in my mind that long ago, but the other thing that strikes me is you do have a lot of experience. This is your 20th anniversary or at least your second anniversary. Have your thoughts changed much or evolved over those 20 years of experience in various categories, areas, not to mention your research and your intellectual and academic writings? I mean, have you evolved a little bit? Absolutely. I'll make three points if I can. One is it is essential for the chair of this organization to be open-minded to new ideas. The world is moving fast. The mistake that's common in the economics profession, which Secretary Schultz once described to me when I was telling him that I was thinking about pursuing further studies, he said, it's fine to get a PhD, but make sure that's not the last day you were learning. Too many people in the profession go back to what they learned 30 or 40 years ago. We've got to be open-minded. The world's changing and the facts are changing. To the characterization I heard from some of your colleagues about, did my opinions change? My opinions change when the facts change. when interest rates are at zero and the balance sheet is growing and the economy is booming. Well, relative to that, I will say I sounded hawkish. In 2018, when the Federal Reserve pushed to raise rates into a financial market meltdown and economic weakening, I said that was a mistake. That was dovish. I expect to have a divergence of views based on the facts on the ground. And if I could just answer one other question you asked about why I want to do this job. I would say I've lived the American dream. I've been the luckiest, most blessed, fortunate person with the greatest teachers. I was a kid from upstate New York in public schools, and I had an opportunity to serve after 9-11. I was walking with a friend of mine who happens to be in this room away from a building near the site of the tragedy. I was walking up Fifth Avenue, and I thought to myself, what am I doing? And so I committed myself to public service then. I did 10 and a half years of public service. I've been grateful for 15 years in the private sector where I've been able to practice my discipline, think anew about things. And the call to service struck again. I'm honored to serve if this body will confirm me. Excellent. You know, I do find it curious that so many people seem to be hung up on the fact that you've been successful even while doing in between bouts of public service, probably a better way to put it. I'm not wealthy, never have been wealthy, and I'm not sure I have much potential to be wealthy, but I have nothing against people who are. That said, real quickly, I do want to talk a little bit about debanking. That hasn't been talked about a whole lot, but speaking of institutions that are dug in, I think there's a, you know, out of the 22,000 people, there are a lot of them that sort of still believe that reputational risk should be a factor, that reputational risk could be based on out-of-favor industries. Can you give me a sense of how you plan to attack that, if you will? Politics have no place not just in monetary policy but in supervision and regulation. If central bankers should stand for anything, it's to resist fads, resist trends, call balls and strikes. That's exactly what I would intend to do. I lean hard yes, Mr. Chairman. Thank you, sir. Senator Alselbrooks. Thank you. Good afternoon, Mr. Warsh. And thank you for meeting with me last week. In August of 2025, President Trump tried to fire Fed Governor Lisa Cook for unsubstantiated allegations widely believed to be politically motivated. Thankfully, both a federal district court and the district of the D.C. Circuit Court of Appeals ruled in favor of Governor Cook, preventing her from being fired while the investigation proceeds. This is a landmark test for independence. Now, Supreme Court Justice Brett Kavanaugh said allowing Cook's firing to go forward would weaken, if not shatter, the independence of the Federal Reserve. So I would like to ask you, will you commit to defending Governor Cook's tenure as Chairman Powell has done? Senator, it was a pleasure to meet you in your office and spend time with you. As I said to you then, I'll repeat here to the broader committee. If I stand for anything, it's the Fed should stay in its lane. As I understand that matter, it's pending before the United States Supreme Court. I think it's inappropriate for me to weigh in on that, especially because in the event that I am confirmed, I could be a party to that matter. Well, I disagree with Mr. Warsh. I disagree with you. This is your future colleague who is confirmed by both this committee and this Senate to serve her country. Chairman Powell has defended her tenure. And your answer to this is you will not defend her. Is that correct? No, Senator, that's not my answer. My answer is there's a pending case before the Supreme Court, the results of which I think we're going to hear about soon. If confirmed by this body, I will follow the Constitution, the Supreme Court law and the best of the Fed's tradition. Let me ask you this, then. Do you agree or disagree with Justice Kavanaugh on the Supreme Court, who said that her firing would weaken, if not shatter, the Fed's independence? Do you agree with Justice Kavanaugh? So I took a constitutional law class, but I wouldn't say I'm worthy of being a Supreme Court justice. What I can say is fended independence means everything to me. And that's exactly what I would try to do if I'm confirmed. Well, I'd like to move on to the criminal investigation of Chairman Powell. The Trump administration could have taken many off ramps to end what is a ridiculous exercise. Instead, they have doubled down. U.S. Attorney for the District of Columbia, Janine Pirro, sent prosecutors to the Fed last week to continue this circus, and they were turned away. Chairman Powell has said that the administration's investigation is not about any testimony or the renovations of a building, calling these arguments pretext. And he said that the threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on its best assessment of what will serve the public rather than following the preferences of the president. So do you dispute Chairman Powell's assertion that the investigations are pretext for policy disagreements? Senator, as I said, with respect to the other case, this is also pending before the courts. I have a ton of confidence in the court's ability to make a final resolution. I'd abide by any judgment of the courts. I want to follow that judgment in the best of the Fed's traditions. Okay, it's difficult. So let me just ask you another question instead. Just a few days ago, bless his heart, President Trump called Chairman Powell a stubborn, incompetent person who he said suffers from Trump derangement syndrome. Now, can you say before this committee that you disagree with this characterization? My disagreements with Chairman Powell are about policy, not about personality or personnel. Okay, let me ask you another question about the president. Now, my colleague a moment ago said to you that the president, you said the president has never asked you about lowering interest rates. And you said he never specifically, is the word you use, demanded that you decrease interest rates. Well, did the president generally suggest this to you as well? You know, in my recitation to your colleagues, I wasn't trying to be clever. The president never generally or specifically instructed me, suggested I should commit to any interest rate path whatsoever. Okay, let me go to another point. So if the Senate does not confirm you by May 15th, the president may inject more financial chaos into our economy by illegally attempting to remove Chairman Powell and installing someone else into your confirmation. Now, the law is quite clear here. If there is a vacancy, the current chairman continues to serve as chair pro tem until the Senate confirms a replacement. But the Trump administration is gearing up to fight this assertion. And I expect every financial leader and reporter is watching your words right now, which can move markets. So I'd like to give you an opportunity to reassure them. Do you agree that the law requires the current Fed chair to continue serving as interim chair while this replacement is confirmed So I haven been advised on that I will say this I was a summer associate for eight weeks at a law firm and that was the extent of my legal career I'm certainly not capable of defining whether the Vacancy Act applies to the Federal Reserve or not. Thank you. Yes, ma'am. Senator Bernie Marino. Mr. Chairman, thank you for the honor of going last. I know that's normally reserved for people with much more status than I have, so I appreciate that very much. Mr. Chairman, I'm going to read something here for a second. Mr. Chairman, it's clear that Mr. Walsh is tremendously accomplished. He is committed to strong capital standards, effective supervision, and meaningful market discipline. He knows unequivocally that the Fed must be independent, not ideological, and nonpartisan. And for this reason, I am proud to support his nomination. I wish I had said those words, but those are the words of Senator Chuck Schumer when he voted to confirm you, in fact, introduce you. So I would like to enter that into the record. As they say, there's nothing wrong with that, but it looks like Democrats used to love you at one point. What changed? The Senate, I don't know. You didn't catch the Seinfeld reference, so it's just proof that you did not watch the show. All right. Let me ask you some quick rapid-fire questions. I know people have enjoyed being here this long, but maybe not others. A lot has been said, and I think it's important, on the plight of working Americans when it comes to being able to afford the basic elements of what it means to be somebody here who's successful in the working class. Are working class Americans better off or worse off than they were three years ago? the aggregate statistics show improvement, but I want to, I do want to suggest with better Fed policy, I think the improvement can be stronger. No, no, clearly, but we're not done and we have a long way to go. But if you're somebody who's an average working American today in 2026, you're better off than you were three years ago because three years ago you were getting demolished by generationally high inflation. Is that true? the trajectory on inflation is improving, but there's more work to do. And one of the key parts of why I'm supporting you is because a total and complete focus and understanding that the interest rate tool is the tool that allows you to help working Americans much more than the balance sheet tool. Would you agree? Yes, I'm here. I do. All right, perfect. Let's move on to central bank digital currencies. Do you agree that the Federal Reserve has no legal right to issue a central bank digital currency. Senator, I agree that they don't have the right, and I think it would be a bad policy choice. So let me just put an exclamation mark on that. Under your chairmanship of the Federal Reserve, you will not have the Federal Reserve explore in any way move towards a central bank digital currency. If it's within the power of the chairman of the Federal Reserve, I agree with that statement. Perfect. That's shipped over to AI. A lot has been said about that. And I worry that some of my colleagues don't feel that this is quote unquote real or happening as quick as it is. It is happening insanely fast. In fact, would you agree that it could lead to an employment shock, especially for entry level white collar jobs? Senator, I agree with you on the pace of the technology revolution. I've had to update my own priors versus six or 12 months ago as I've seen the rate of improvement of the models. Senator, the way I'd describe it is this. I am more confident that there will be improved output than I am certain about when the effects of that would be on the labor market. I basically believe in the following good economic tenet, which is described as the lump of labor fallacy. and we tend to think in economics, there's only a fixed number of jobs and we've got to fill them every day possible. The labor force, the structure of the labor market changes. The jobs that will be created two or three years from now, some of which are unimaginable to us today, but the lag between the improvement and output and the effect on the labor markets, that's got to be central to the Fed's thinking given the pace of innovation in this cycle. And this concept of price stability plus maximum employment. That maximum employment piece is problematic when policymakers open our borders and let tens of millions of people come into this country illegally. Is that not correct? I'm going to let you guys handle immigration policy. I'm going to have plenty on my plate if confirmed. But adding 10 to 20, 30 million people into the country when you're trying to make certain that everybody here has a job is problematic, correct? The central bank takes the labor market is as it is, and that's a function of policies you and the administration put in place. It's not our place to be opining on that. Okay. And let me just add one last thing and more to your wife. How did you get so lucky to have a guy that's so romantic that on Valentine's Day of 2006, he brings you to a Senate hearing? I mean, you set a high bar for all of us. Look, I'm going to ruin the suspense for everybody. You're going to be confirmed. You're going to be the Federal Reserve Chairman. And most importantly, you're going to do an incredible job. And I'm honored to be able to have been part of that process and will vote for you resoundingly. Thank you, Senator. Well, that concludes the question and answer portion of today's hearing. I'd like to thank our nominee for testifying before the committee today and thank you for your willingness to serve our country. For senators, all follow-on questions for the record must be submitted by tomorrow, April 22nd at noon. And for you, the witness, please respond by Thursday, April 23rd, 1 p.m., to the written questions you receive in order to facilitate this committee promptly processing this nomination. When it comes with that, this hearing is adjourned. Thank you. Thank you, sir. And welcome to the Halstead Report. I am Frank Holland in for the Judge Scott Wapner. You've just been watching the confirmation hearing for Fed Chair nominee Kevin Warsh before the Senate Banking Committee. Let's get a quick check of the markets at this hour. A lot of red on this board right now. You can see the Dow is pulling back fractionally. The S&P and the Nasdaq pulling back right around a quarter of 1 percent. The Russell down almost a half a percent. This says oil prices have moved to the upside over the last few hours, looking at WTI up over 4 percent higher right now. Right now, we also want to turn things over to our senior economics reporter, Steve Leesman, with the highlights from Kevin Warsh's hearing on Capitol Hill. Steve, I want to get your take on what you heard and what you saw. Yeah, he underwent pretty sharp questioning about potential conflicts of interest out there, as well as from his vast holdings, and whether he had promised to President Trump to lower interest rates. On the first question, Walsh said he will sell virtually all his financial assets that amounted to the hundreds of millions. But Senator Warren and other Democrats expressed concern that it would never be disclosed what was in several financial vehicles worth hundreds of millions of dollars that could contain conflicts, while Warsh has ultimately not disclosed. He said he wouldn't disclose them. He said he would sell them. I have worked tirelessly with the ethics officials at the Office of Government Ethics. And you have not revealed $100 million in assets. And have agreed, Senator, to sell all of my financial assets, including the Duquesne assets. Is there anything to tell us if you have investments, for example, in vehicles set up to advance Jeffrey Epstein? Is that what you're telling us? You just won't tell us? Senator, what I'm telling you is that those assets that you represent as juggernaut will be sold if I'm confirmed before I take office and sign the oath of office. On a separate issue, Worsh's insisted that President Trump had not asked him to lower rates, and he had never agreed to do so. there was pushback from one senator who cited a Wall Street Journal interview where the president appeared to say Walsh told him that he thought rates should be lower. Quite a different thing in my mind anyway. Walsh called for regime change at the Fed, including a smaller balance sheet that would allow for rates to be lower. He repeated several criticisms of the Powell Fed, including policy errors that he said led to the inflation that followed the pandemic. And Walsh was generally upbeat about technology and the potential of the economy to boot for higher potential growth. And while Walsh received strong GOP support, remember his nomination not expected to go forward because Senator Tom Tillis repeating today his intention to hold up the nomination while there's still a criminal investigation into Fed Chair Powell. And just one more thing, Frank, if you look at interest rates, they actually drifted a little higher while Walsh was talking. And the probability of a rate cut, any rate cut this year, is down to just 30 percent, Frank. You know, Steve, to your point, the two-year and the 10-year They're both moving a few basis points higher. I want to go back to what seemed to kind of be the elephant in the room. President Trump on CNBC earlier today saying that he would like to see rate cuts as soon as possible if and when. Kevin Walsh has confirmed. Kevin Walsh himself, he really focused on Fed independence. Do you feel like he answered the questions, whether they were direct or indirect, about the president's influence on his decisions? I think it depends on if you're a Democrat or you're a Republican, Frank. I'm sorry to say. I personally did not read the Wall Street Journal article as as Kevin Warsh promising to lower interest rates. I thought it was interesting that there was a hypothetical given to to Warsh that said, well, look, if you lower rates to one percent, won't that cause inflation? And he refused to answer that. Warsh did do quite a dance to make sure he was not criticizing the president or anything he said. I thought, Frank, that he understated the challenge that the president has meant to the Federal Reserve. In his opening statement, Warsh said that it's OK for elected officials to make comments and express their preference for interest rates. Of course, President Trump has not done that. President Trump has gone much, much further. He's lambasted the Fed, lambasted Powell. He has fired Lisa Cook, the Fed governor. He's threatened to fire Powell. So I thought Warsh went out of his way to make sure he was not critical of President Trump. But I also think it's a long way to say that he promised the president he would lower interest rates. All right. Steve Leesman, senior economics reporter. Steve, thank you so much for your insight and analysis on a big day like this. We also, of course, have the investment committee here. Joining me for the hour, we have Joe Terranova, Jason Snyte, Rob Seachin, and Josh Brown. A lot to parse, a lot to break down. Joe, I'm going to start with you. We were talking about Kevin Warsh and his independence yesterday after Steve brought us his opening statements and pre-prepared remarks. What did you make of what he had to say? Do you think anybody who is concerned about Fed independence? Do you think those fears have been calmed after this? So I don't think anything about Kevin Walsh is related to his qualifications. I think everyone understands he's more than qualified. He is disruptive, which where the Federal Reserve is today in 2026, I think is a needed dynamic. I think if I'm in President Trump's administration and for the president himself, they're watching this testimony today and there has to be a way that they pursue the transparency that they claim to be seeking in a criminal case against Chairman Powell without going to that degree and therefore allowing the Senate to confirm Kevin. To me, that gets you to where everyone ultimately, including the administration, is in the best place. Kevin Wash is the Federal Reserve Chairman. And the only way you get there, the only way you get there is by removing that criminal court impediment that's in front of us. I think today, to your question, he did an adequate job, a job that he needed to, addressing the fact that he is an independent thinker and that, in fact, he will move forward with monetary policy, regardless of what the administration's wishes would be. And I think the bond market is validating that perspective because yields are ticking modestly higher. All right. Josh, I want to come over to you and get your take. Very important to note, the markets did move lower after the test. The hearing began. However, oil prices also moved higher. Some thought is that as we're nearing the end of the ceasefire deadline, that puts some pressure on the oil market, which also puts some pressure on the overall stock market. But Josh, I do want to get your take on what you heard and what you saw. Yeah, I think that there's no surprise in here at all. I think he will be confirmed. I think everyone knew he would be confirmed. I'm not sure that there's any sort of read through into any specific part of the curve. That's worth pointing out. I just think the bond market has understood for a very long time that this would be the next phase in Fed governance. And we're already sort of looking past it. I think the more interesting things happening, I agree with you guys, are happening in the commodities, specifically oil. That really has nothing to do with the Fed. The Fed can't lift or drop the price of oil. They can't jawbone it. They can't move it around with their feelings. And that's really been a much bigger factor in the push and pull for stocks over the last, let's call it, four to five weeks. C.J., I want to come over to you. He mentioned regime change at the Fed, things like changing when the summer of economic projections is put out or compiled. Lowering the balance sheet says the Fed shouldn't hold long-term treasuries. Any thoughts in your mind about what he said and how it could impact the financial markets? Well, he certainly had a tightrope to walk. I mean, Trump was watching this, no doubt. He wants rate cuts come hell or high water. And, you know, Kevin has to convince the majority of his fellow committee members on any policy, any possible policy change. And, you know, he probably came under fire. I know we didn't get to hear the early parts of that because we were getting getting ready for the show. but the reality of it is he went from a policy during the global financial crisis of advocating for higher rates to a policy on possibly reducing rates when the data supports it. I think he came across about as well as he could to all the constituent audiences including the Republicans who want to see deficit reduction So listen I don know that he could have done any better He certainly presents well. He's incredibly articulate. He has the background to do this. And I have no doubt that he will get confirmed. It's just a matter of time frame. Yeah, I don't think his qualifications are under any type of question. I think everybody agrees there's a consensus. He has qualified for the role. But, Jason, I want to come back over to you and ask you the same question about his independence. I don't think the president did him a lot of favors on CNBC on Squawk Box earlier today. Just kind of putting a shadow over this. Your thoughts on his independence and how the market's receiving on this. No doubt about it. I mean, it was a tough needle to thread without a doubt. No surprises for me in terms of the commentary. I think he did it. I think to Seach's point, I think he did as well of a job as he possibly could. focusing on the independence, focusing on the dual mandate and focusing on labor. I mean, there's been a lot of talk, obviously, on rates and where we're going on forward. And obviously, the market is kind of playing into that narrative as well. But I think he handled it well. And clearly, he will be the new Fed chair. So no surprises here. And I think we'll kind of see how things evolve once he gets in the seat. So, Joe, pick your metaphor, or threading a needle, walking a tightrope. It was kind of a dance he had to do right here. One thing he did say, though, is that rate cuts would help a broader range of people. I'm paraphrasing. It's not a quote, but he did say rate cuts would help a broader range of people. It seemed like he was kind of alluding to people on the lower end of the economic spectrum. The fact that he said that rate cuts would help, is that dovish in your mind? Is that just an actual analytical take on what's going on in the economy? How did you take that part? I think that's an analytical understanding that we need to lift up a large part of society that has not joined along in this K-shaped economy that we've all spoken about. We've kind of forgotten the people that are have nots in the 2026 economy. So I think that addresses and hopefully it's it's in action, not just in words. The offset to that was what we heard regarding his thoughts on the balance sheet, which maybe indicate at times of stress for financial markets. We're not going to be able to look towards the Federal Reserve to type of to get the type of support that we have received in the past. The question, though, is not will it help? It will. The question is when to do it, because you don't want to make this worse. There's certainly a risk if you cut now in the midst of everything that's going on of deanchoring what is long term inflation expectations. So there's this perfect time. And again, he's walking a tightrope. Then the entire Fed is walking a tightrope until we can get inflation expectations to stay low. You cannot deal with issues in the labor market and issues in income inequality until that happens, because you're going to compound the problem prospectively if you do it too early. Josh, I totally agree. Yeah, I very much agree with what Rob is saying. You know, we don't even know for sure that low versus high interest rates are good or bad because we have such a bifurcated consumer. One of the things that I was saying a couple of years ago was that actually, perversely, high interest rates turned out to have been a stimulus program for the top 10 percent of households who had cash that was literally spitting out more cash into their accounts. It actually produced a wealth effect for people who were taking no risk whatsoever. Older people, people with huge cash balances, people that don't have mortgages, people without debt. All of a sudden, they were earning 5, 5.25% on their cash, something that they hadn't seen in a generation. And that feeling of being even more wealthy probably helped fuel even more inflation, especially if you're looking at housing in some of the top cities in the country, the prices for apartments, for condos. So even if we keep rates high, it's not a guarantee that that will stop economic activity. And to Rob's point, even if we drop rates, that's not necessarily going to benefit the people who are struggling if it screws up the longer-term inflation expectations. So I think that Warsh talking about being nimble and using better data is actually the important part. Because just when you think you know what to do with rates, the economy could throw a curveball. You say, oh, wait a minute. That's how this works? And I think the Fed was late to figuring this thing out. Josh, we've got to move on. Another curveball happened after the bell yesterday. The other big story of today, Apple's next era, Mackenzie Cigalos. She has the very latest on Tim Cook's replacement. We'll debate what it means for investors. Halftime's back in just two minutes. What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Borsten hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. And welcome back to Halftime. It's the end of an era in Cupertino as Apple announces a major change in the C-suite. Mackenzie Cigalas joins us now with all the details. Mack. So, Frank, the early read from Wall Street is that Apple is elevating exactly the kind of executive that investors would have expected. A longtime company insider with serious hardware credentials while keeping Tim Cook in place as executive chairman to help manage Apple's relationship with President Trump. Now, John Ternus is not an AI visionary. He is a builder, a mechanical engineer who spent nearly his entire career inside of Apple. A former company executive telling me that Ternus is a steady, trusted operator who plays it safe, but knows how to get new hardware out the door. And that is key because Apple is no longer trying to beat OpenAI or Google in the brute force model race. Instead, it's leaning into winning AI by letting you plug whatever chatbot you want into Apple devices. That is winning at the edge. that is precisely why Ternus pushed for lower-cost hardware like the $599 MacBook Neo and its latest budget phone offering, the 17e, all with the goal of getting more AI-ready devices into more hands. JP Morgan and TD Cowan see that as a plus, especially as investors look for a new wave of AI-first products, devices that Apple's reportedly working on right now. Foldable phones, wearables like glasses and a necklace pendant, plus new smart home devices. But those shares down almost 3 percent, Frank. Mackenzie Segales, the very latest on the CEO transition over at Apple Mac. Thank you very much. Everybody here on the desk owns Apple. Josh, let me give you the first swing at it. New CEO stocks down about two and a half percent right now. Hardware guy, not an AI guy. Yeah, it's the right guy, though. And they kind of tipped that it was going to be him when they launched the Mac. Neo, which is the $600 laptop, they actually sent him to Good Morning America and not Tim Cook. And I think Bloomberg did a big profile on him a month ago. So I don't think people knew that the announcement was coming now. But I think people sort of understood that this was the central candidate that everyone was kind of coalescing around. And it should be him. He spent more than half of his own life at Apple. He oversaw the development of the iPad. He was the head of hardware, when they did the AirPods, some of the biggest successes that Apple's ever had on the hardware side. And the thing they say about him versus Cook is he tends to be more decisive. So maybe we're going to get back to a more Steve Jobs-esque era at Apple, where it's less caution and committee, and it's more somebody taking swings and saying yes, no. And I think the stock market likes it. All right. So, Snipe, you also hold this company. What do you think of the transition? What do you think of the surprise announcement after the bell yesterday and also ahead of WWDC coming up on June the 8th? Yeah, I think for me, obviously, Apple, being a hardware company, selecting a hardware guy I think is important. I think for me what the focus is on a go-forward basis is how do they interact with a new agentic AI world. I think that's going to be interesting to me. As McKenzie talked about the new products and services, let's figure out what that integration looks like going forward, and I think that could be potentially exciting. Joe, I want to come over to you. A lot of notes out. Most of them bullish about this transition. Some people believe this may be a change to Apple's non-M&A strategy. They believe Ternus might be more open to that. Do you think that's what this company needs? Somebody with a new thought about M&A, about buying companies and kind of bolting them on to Apple's offerings that they already have? No, I'll turn to Josh's remarks. I think more advantageous would be a direct nature, a decisive nature, a little bit of a different strategic approach than we've grown comfortable with over the last decade or so. John Ternus is someone that comes in and, to Jason's point, brings that expertise in hardware. Why is that important? Because we are all waiting for that tangible product to be placed in our hands where we could fully integrate, engage and utilize AI. And we all expected that that consumable would come from Apple. And I think John Ternus, as a hardware expert there, gives us the best bridge to get to that moment where the consumer has that tangible product from Apple in their hands. Also, interestingly, will be the relationship. Can he maintain the positive relationship that Tim Cook has right now with the Trump administration? I think that's a big question. Tim Cook often seen as a diplomat slash CEO. Ceech, I want to come back over to you. Wedbush's Dan Ives came out with a very bullish note maintaining his price target on Apple at $350. Still has it outperforming. He added this could be the time to flex the muscles and go on the offensive instead of the defensive. Well, they certainly have the ability to do that because their capex to sales is as low as anybody. It's about 3%. I think it's the right choice, commitment to products, operational efficiency and execution. This is clearly somebody that's been there a long time. He knows what he's doing. It's still an expensive name. It's performed tremendously well. You've never wanted to bet against Apple. But they have this fortress balance sheet. When they decide to turn it on and make the move and invest in the product that they're going to bring to market to take advantage of everything we see every day, their loyal user base will adopt it. They are not going to change. And so a product guy to bring that into the mix is the right guy. And we're very long the name, slightly underweight, but very long the name. Again, John Turner's name is successor for Tim Cook. Shares down about 2.5%. Final trades coming up on halftime. Stay with us. What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. Welcome back to Halftime. Time for Final Trades. Josh Brown, you're up first. Took profits in my eBay trade. Didn't know where else to mention it. So here goes. No position currently. All right, moving on. Rob. Service now going into the earnings tomorrow. You pay now. Jason. Amazon, I believe in the reacceleration of AWS. I love that Amazon final trade because everyone is trying to strengthen the relationship with Anthropic. We received the news today about Amazon doing so. I think that's going to take it to new all time highs. Another company that has a strong relationship, investing 51 million in 2023. That valuation is worth close to four billion today for their stake in Anthropic. It's Zoom communications. It's recovered after earnings. It's back above 90, headed towards 100, I believe. All right, that's going to do it for Halftime, The Exchange with Kelly Evans. It starts right now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern, only on CNBC. All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com forward slash Halftime Report disclaimer. What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts.