Powell criminal probe upends Trump's search for a new Fed chair

Kevin Hassett

Kevin Hassett, one of Trump's top economic advisors, has long been considered a likely pick to replace Powell.

As of January, Hassett is tied with Kevin Warsh, a former Fed governor, at 40% for the odds of being Trump's pick at both Kalshi and Polymarket.

Asked about the criminal probe into Powell, Hassett said it made sense to investigate why the Fed's renovations overran their initial cost estimates. (The Fed has said costs went up due to changes in design, the increase in cost of materials, and unforeseen complications such as a larger amount of asbestos than anticipated.)

"I think that it's really important to understand where the taxpayer money goes, and understand why it goes this way or that," Hassett told reporters outside the White House on January 12.

Before joining Trump's orbit, Hassett advised a succession of Republican presidential nominees on economic policy, including George W. Bush, John McCain, and Mitt Romney.

During Trump's first term, Hassett served as director of the president's Council of Economic Advisors. He returned to the White House during the COVID-19 pandemic and was severely criticized for publishing a model showing coronavirus deaths hitting zero by May 15, 2020.

In October 1999, Hassett cowrote with journalist Jason Glassman "Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market." Some economists have heavily criticized the book, largely because the index took more than 22 years to reach that threshold.

Kevin Warsh

Trump has long praised Warsh, the other Kevin on his shortlist to replace Powell.

In December, Trump told The Wall Street Journal that Warsh was at the top of his list.

"I think you have Kevin and Kevin. They're both—I think the two Kevins are great," he told the publication. "I think there are a couple of other people that are great."

Months earlier, Trump told reporters that Hassett, Warsh, and current Federal Reserve Gov. Christopher Waller were "the top three."

In leading prediction markets like Kalshi and Polymarket, Warsh's odds surged in mid-December, then shrank, and are now trending higher once again.

Back in his first term, Trump reportedly considered Warsh to lead the Fed before he chose to nominate Powell in 2017.

Warsh spent his early years at Morgan Stanley, working as a specialist in mergers and acquisitions. President George W. Bush nominated him to the Fed in 2006 after Warsh served as an economic advisor in the Bush White House.

Drawing on his Wall Street ties, Warsh played a pivotal role in the central bank's response to the 2008 global financial crisis. When he left the Fed in 2011, the Times called him the Fed's chief liaison to Wall Street.

From the sidelines, Warsh has echoed Trump's criticism of Powell, calling for "regime change" at the Fed.

"The specter of the miss they made on inflation, it has stuck with them," Warsh told CNBC in July. "So one of the reasons why the president, I think, is right to be pushing the Fed publicly is we need regime change in the conduct of policy."

Christopher Waller

Fed Gov. Christopher Waller, who currently serves alongside Powell on the central bank, has previously said that he thought his interview went well.

In late November, Waller told Fox News he was pleased about his conversation with Treasury Secretary Scott Bessent, who has led Trump's search process.

In mid-December, CNBC reported that unnamed senior administration officials said Waller had a "strong interview" with Trump himself.

Despite optimism in the press, Waller's odds have collapsed in leading prediction markets. As of January, Waller is under 10% at both Kalshi and Polymarket.

Waller, a longtime regional Fed official, was seen as a convention pick when Trump nominated him to the central bank in 2019. Simultaneously, Trump also nominated Judy Shelton, a former campaign advisor and a Fed critic. The fight over Shelton's nomination soon spilled over onto Waller's.

In December 2020, the Senate confirmed Waller 48-47, the narrowest margin for any Fed governor since 1980, per The New York Times.

In July, Waller joined Gov. Michelle Bowman (another Trump first-term pick) in opposing the Fed's decision not to cut interest rates, the first dual dissent in more than 30 years.

Rick Rieder

There's also a big Wall Street name on Trump's shortlist.

Rick Rieder, chief investment officer of global fixed income at BlackRock, has spent decades on Wall Street, dating back to his time at Lehman Brothers.

Rieder is responsible for managing roughly $2.4 trillion in assets, per BlackRock. He's served as a member of the Fed's Investment Advisory Committee on Financial Markets.

Michelle Bowman

Federal Reserve Gov. Michelle Bowman was once thought to be a potential contender, but hasn't received the same buzz as other hopefuls in recent months.

In 2018, Trump appointed Bowman to the central bank.

After confirmation, she was reappointed in 2020. In June, she was narrowly confirmed as the vice chair of supervision.

Bowman started as an intern for Sen. Bob Dole. During the George W. Bush administration, she held posts at FEMA and the Homeland Security Department. She was vice president at Farmers and Drovers Bank in Kansas, her family's bank, before becoming the state's top banking official.

In September 2024, Bowman became the first Fed governor to vote against an interest rate decision since 2005. In July, she again voted against holding rates steady, though this time Waller joined her dissent.

The hopefuls who appear to have missed the cut

Trump's shortlist at one point reportedly had almost a dozen names.

CNBC previously reported that the following are no longer under consideration: David Zervos, Managing Director and Chief Market Strategist at Jefferies; Dallas Fed President Lorie Logan; former St. Louis Fed President James "Jim" Bullard; Fed Gov. Philip Jefferson; and Marc Sumerlin, a former economic advisor to President George W. Bush.

Former Fed Gov. Larry Lindsey told CNBC that he withdrew from contention.