Kevin Maxwell Warsh (born April 13, 1970) is an American financier and bank executive[1][2][3] who served as a member of the Federal Reserve Board of Governors from 2006 to 2011.
During and in the aftermath of the 2007–2008 financial crisis, Warsh acted as the central bank's primary liaison to Wall Street[4] and served as the Federal Reserve's representative to the Group of Twenty (G-20) and as the Board's emissary to the emerging and advanced economies in Asia.
At the time, former Fed vice chairman and Reagan appointee Preston Martin said Warsh's nomination was "not a good idea" and that if he had a voice in the Senate, he would vote no.
[16] Ben Bernanke wrote "His youth generated some criticism, including from former Board vice chairman Preston Martin, but Kevin's political and markets savvy and many contacts on Wall Street would prove to be invaluable.
"[17]: 124 In his confirmation documents, Warsh listed two published writings - "Deciding to Run for Congress: An Opportunity Cost Model with Partisan Implications" and "Corporate Spinoffs and Mass Tort Liability.
[24][25] According to author David Wessel, "Warsh established himself as the chairman's protector in Republican circles and Bernanke's bridge to Wall Street chief executives.
"[26] Bernanke would write "Don Kohn, my vice chairman, with his long experience at the Fed, and Kevin Warsh, with his many Wall Street and political contacts and his knowledge of practical finance, were my most frequent companions on the endless conference calls through which we shaped our crisis-fighting strategy.
[28] The next day Morgan Stanley was converted into a bank holding company in order to access Federal Reserve loans, in effect saving the firm.
Having worked at Morgan Stanley, he provided crucial insight into the real condition of Wall Street, and well before the panic he told his Fed colleagues that the financial system was vastly undercapitalized.
In his memoir, Chairman Bernanke writes about his frustration, "I vented in an email the next day to Don Kohn: 'I find myself conciliating holders of the unreasonable opinion that we should be tightening even as the economy and financial system are in a precarious position and inflation/commodity pressures appear to be easing.
"[38] In September 2009, with unemployment at 9.5% and climbing, Warsh argued that the Fed should begin to pull back on its efforts to help the real economy recover: "if policymakers insist on waiting until the level of real activity has plainly and substantially returned to normal — and the economy has returned to self-sustaining trend growth — they will almost certainly have waited too long… There is a risk, of much debated magnitude, that the unusually high level of reserves, along with substantial liquid assets of the banking system, could fuel an unanticipated, excessive surge in lending.
"[40] At the November 2010 FOMC meeting, Warsh was extremely skeptical of the Fed's plan to generate economic activity and jobs by trying to lower long-term interest rates.
Now that financial markets were functioning more normally, he believed that monetary policy was reaching its limits, that additional purchases could pose risks to inflation and financial stability, and that it was time for others in Washington to take on some of the policy burden... As he had promised, Kevin voted in favor but, the following week he delivered a speech in New York and published an op-ed in the Wall Street Journal[41] that reflected his reservations.
He argued that monetary policy alone could not solve the economy's problems, and he called for tax and regulatory reforms aimed at increasing productivity and longer-term growth.
Federal spending on infrastructure projects such as road buildings, for example, could have helped make our economy more productive in the longer term while putting people back to work right away.
In December 2016, Warsh joined a business forum assembled by then president-elect Donald Trump to provide strategic and policy advice on economic issues.