00:00Looks like we've got the vote. Over to Mike McKee. He's up there in the Russell Rotunda. Mike.
00:05Well, we have a new Fed chair. At least we will have as soon as he's sworn in. Kevin Warsh
00:09now
00:10has 51 votes for confirmation. The vote's still open. It's 51-40. So there are some Democrats and
00:16some Republicans who haven't voted. We know that John Fetterman, the Democrat from Pennsylvania,
00:21did vote in favor of Kevin Warsh. So it doesn't really matter how many he ends up with. He has
00:2651. That's what he needed. So the question now, guys, becomes, when can they get the paperwork
00:31done and get him sworn in? Jay Powell is going to be the Fed chair until Friday midnight. And after
00:37that, any time we could see Kevin Warsh put his hand on the Bible and take the oath.
00:43And then Saturday morning, he gets the new office, Mike? Is that how it works?
00:48I'm not sure if it works exactly like the British prime minister switch out, where you get up and
00:55you just walk out the door and the other people move in that day. But I'm sure that the desks
01:00will
01:00be rearranged and the furniture will be rearranged in very short order.
01:04Well, speaking of furniture, does he then become in charge of the renovation and all that stuff
01:09that's happening on there? Well, technically, he would be in charge of the renovation, yes. Although
01:15I think what you're getting at, of course, is what happens with the Justice Department. And they
01:21would blame Powell for anything that had happened before, because they'll say, Warsh comes into the
01:26middle of this. So we still don't know what's going to happen with that. The inspector general
01:30has been working on a report on it since last July. So the belief is it won't take that much
01:36longer.
01:37And if the inspector general finds nothing wrong, then the question is, will the Justice Department
01:43say it is closing the investigation with prejudice, which is the legal term for not bringing anything
01:49back? Or will they say, we're going to look at it and see what we're going to do? Because if
01:53they're
01:53going to do that, then Jay Powell is going to stay on. So what role will Jay Powell take? I
01:59know he was
01:59asked a lot about this at the last Fed meeting, Mike, but what have you been able to gather?
02:04I think he'll be the quiet guy over in the corner. He doesn't want to sort of interfere with Kevin
02:09Warsh taking over. He doesn't want to steal the spotlight. Any kind of speech or public appearance
02:14he would make would be scrutinized and he would be held up against what Warsh is saying. And it would
02:19be sort of like a shadow chair. And he doesn't want to do that. So I suspect he'll come to
02:24the meetings
02:24and he will offer his opinions and talk to the other governors behind the scenes. But we won't hear
02:30much from him going forward. So, Mike, do we know who in terms of the final vote? Do we have
02:36any idea
02:37who was the deciding vote here? We don't. I am not on the Senate floor, so I couldn't see who
02:44actually cast that vote. But we can try to find out for you. It's probably a Republican. Generally,
02:50that's the way it works. If the party in power is putting something through, the person from that
02:55party will vote last. You remember way back with Obamacare, when John McCain came in last to vote no,
03:03and it failed in a very dramatic moment. This wasn't nearly the drama.
03:08Yeah, the thumbs down, I think, that was seen around the country at that time a few years ago.
03:13So, Mike, just take us through the process one more time once the Senate, you know,
03:17when the formalities here and the actual swearing in, what's the timing of that?
03:23Well, we finished the vote and then the Senate records it and sends the paperwork down to the
03:28White House. As I mentioned, the president's in China, so he's not going to get it
03:32directly today or tomorrow. They could send it to him if it's something he needs to do
03:37immediately. But if it's not, then they could wait till he gets back. And then Kevin Warsh has
03:43to start divesting his large portfolio. He made an agreement with the Office of Government Ethics
03:48on how he's going to do that. You can't sell it all at once. And some people take quite a
03:54while.
03:54Some of the richer people who come into administrations can take. Scott Besson took a
03:58year to get rid of some of his. So once that's underway, I think the Office of Government Ethics
04:05would say that's fine. And then they can swear him in. And so could be Friday, could be Monday,
04:11or could slide into next week a little bit. But it's going to be any day now. It doesn't really
04:16matter till Saturday morning.
04:18Hey, Mike. So once we get through all kind of the logistical stuff, I mean, the vote was the big
04:23deal
04:23and so on and so forth. But I think about, you were so kind enough to remind us how many
04:28meetings Kevin Warsh will preside over. And you're talking about five meetings this year.
04:33Is the next big kind of interesting moment for him on June 17th when he does reside over that meeting
04:40and how he conducts himself, what he says at the press conference?
04:44Well, yes, that's going to be exactly what people are looking at. Nobody's going to expect a rate cut
04:49or anything like that. But there are several questions. One is whether he'll even have a news
04:53conference. He's tended to say that Fed officials talk too much and he isn't sure whether it's a good
04:58idea to have a press conference every meeting. He might do it this time, certainly because it's his
05:02first one. There's also a question about whether they change the language in the statement. We had
05:07the three dissents about the bias sentence. Warsh has said he doesn't like forward guidance. So my bet is
05:13that comes out. So that will be something to look at. He may change the structure of the statement,
05:18which really hasn't changed in years and years. So there are going to be things to look at. Also,
05:23June is the next summary of economic projections and dot plots, which Kevin Warsh says he doesn't
05:29like. It might be too early to be able to change that, but we might get some comment from him
05:36or
05:36some talk in the minutes of the meeting that they considered what the possibility of doing that is.
05:42So there's a lot on the plate. There just isn't going to be a lot of drama, I don't think,
05:46except about Kevin Warsh himself. Well, on that, Mike, how does he build consensus
05:52at the Federal Reserve? How does he bring people together to support his view?
05:57Well, basically, you've heard it from many of the Open Market Committee members.
06:01He has to come up with a cogent argument that can win their vote. And right now,
06:07there is no argument for cutting interest rates. He has said that you can cut rates because
06:11productivity from AI is going to be high, and that will bring down inflation. But that's not
06:16happening right now. So the only argument that he's advanced publicly for doing that
06:21isn't relevant. So he's going to have to work for a while to get the other people on board with
06:28the
06:28idea of cutting rates. Now, a lot of the Open Market Committee members have said,
06:31if inflation starts to come back down, then we can cut rates. And mechanically, if inflation comes
06:38down, real rates rise, which is a break on the economy. So they don't want that to happen.
06:45So you could see if we get a drop in inflation, a movement towards more rate cuts. But it's going
06:50to be a while. Most economists think we won't really see things roll over, if the war ended today,
06:56roll over until maybe September. So there's going to be at least two meetings where they're on hold.
07:02And we'll see where we go beyond that.
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