Senator Kevin Cramer questioned Federal Reserve Chair nominee Kevin Warsh during a Senate Banking, Housing, and Urban Affairs Committee hearing on Apr. 21. The discussion focused on the independence of the Federal Reserve and issues related to unanimity in decision-making.
The topic is significant as it addresses concerns about groupthink within the Federal Reserve and examines how philosophical perspectives may influence monetary policy decisions.
Cramer asked Warsh whether he had observed philosophical independence within the institution’s deliberative process. He said, “people expect somebody who’s appointed by an elected official and has to be confirmed by 100 other elected officials would somehow not have a philosophy. […] 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.” Cramer also raised questions about frequent unanimous votes in interest rate decisions at the Fed, asking Warsh if he was aware of how often such votes are unanimous.
Warsh responded, “I’d say over the last 15 years, decisions have been unanimous or near unanimous,” adding, “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. These are very hard calls.” Warsh also discussed his evolving views over time: “Absolutely,” he said when asked if his perspective had changed in two decades. “It is essential for the chair of this organization, to be open-minded to new ideas… My opinions change when the facts change… In 2018…I said that was a mistake. That was dovish. I expect to have a divergence of views based on the facts on the ground.”
Cramer addressed debanking practices where banks deny services based on reputational risk associated with certain industries: “Speaking of institutions that are dug in…there are a lot of them who still believe that reputational risk should be a factor…Can you give me a sense of how you plan to attack that?”
Warsh replied: “Politics have no place, not just in monetary policy but in supervision and regulation,” continuing with “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.”
Cramer concluded by describing his support for Warsh as a “hard yes.”
Cramer serves North Dakotans by assisting them with federal agencies according to the official website. He grew up in Kindred, North Dakota; earned degrees from Concordia College and University of Mary; served three terms as North Dakota’s at-large representative before joining the Senate; serves on committees including Environment and Public Works; Veterans’ Affairs; Banking Housing & Urban Affairs; and together with his wife Kris has five children and eight grandchildren according to his official biography.