The Federal Reserve has a chair, a nominee to replace him, and no clear path to a transition.
Jerome Powell, who has led the world’s most powerful central bank since 2018, sees his four-year term as chair expire on May 15. But Kevin Warsh, the former Fed governor that President Donald Trump nominated in January to succeed him, has no Senate confirmation hearing date. Legal battles, political maneuvering, and questions about Powell’s intentions have made the road ahead murkier—and more drawn out—than the White House and investors would like.
If Warsh isn’t confirmed by May 15, there are three plausible scenarios. First, the Senate could go on to confirm Warsh before the Fed’s next meeting on June 16-17, and the transition would happen relatively close to schedule.
A second option is that Powell could leave his board seat on May 15, at which point the Fed’s vice chair, Philip Jefferson, would step in to handle board administration while Warsh awaits confirmation. Or Powell could stay on the Board of Governors—where his term doesn’t expire until January 2028—and continue to chair the Fed’s rate-setting meetings himself until his successor is installed.
In practice, how any of those scenarios would unfold isn’t entirely clear. The Federal Reserve Act leaves room for interpretation, and much would depend on how institutional norms are applied in real time.
But in theory, the outcome depends on two things: Whether a one-man blockade in the Senate breaks, and what Powell decides to do next. Right now, neither has a simple answer.
Central to this uncertainty is the continued fight over the Justice Department’s criminal investigation of Powell, related to testimony he made before the Senate Banking Committee last June. Prosecutors said that testimony may have contained discrepancies, opened a grand jury investigation in late 2025, and sent subpoenas in January. Powell called the investigation a political weapon.
Last week, Chief Judge James Boasberg of the U.S. District Court for the District of Columbia agreed; he quashed the subpoenas and said the government had offered no evidence that Powell committed any crime “other than displeasing the president.” U.S. Attorney Jeanine Pirro said the government would appeal the decision. Trump, in a late-night social media post, called for Boasberg’s removal from the case.
The investigation and its aftermath appear to have made a smooth handoff less likely.
Sen. Thom Tillis of North Carolina, a Republican on the Senate Banking Committee, has vowed not to support Warsh’s confirmation until the Justice Department ends its investigation of Powell. One defection is enough to keep the nomination from reaching the Senate floor. Tillis, who plans to retire when his current term ends, said the U.S. Attorney’s appeal of Boasberg’s ruling “will only delay the confirmation of Kevin Warsh as the next Fed Chair.”
Newly unsealed court documents add another layer of complexity. According to prosecutors, Powell’s personal attorney told Pirro at a Jan. 29 meeting that Powell might not leave his board seat when his chairmanship expires if the investigation remained open.
The Justice Department called the statement “strongarming,” but Powell’s legal counsel disputed the characterization, saying his resignation was never meant to be used as a bargaining chip. The Fed declined to comment.
TD Cowen analysts said Friday the probability of Powell remaining past May 15 has risen. That brings the question back to Powell’s board seat, and understanding it requires separating two roles that are easily conflated.
When the president nominates a Fed chair, he is actually nominating that person to fill two distinct confirmed positions: a seat on the seven-member Board of Governors, which carries a fixed term of up to 14 years, and the chair position itself, which is a four-year designation layered on top of that governorship. Powell’s chairmanship expires May 15, but his governorship runs to January 2028.
Traditionally, departing chairs have left their board seats when a successor is sworn in—both Ben Bernanke and Janet Yellen did it—but tradition isn’t law. Powell has declined to share his plans, offering only that he is focused on his remaining time as chair.
If the Senate does confirm Warsh before the June 16-17 meeting, most of this complexity is resolved. That is what the Trump administration is pushing for.
“The White House is working closely with Congress to swiftly confirm Warsh and restore confidence, competence, and credibility to the Federal Reserve,” White House spokesman Kush Desai told Barron’s.
But with no hearing date set, the appeal keeping Tillis’s blockade in place, and the Senate set to go on recess from March 30 through April 10, that window is narrowing.
If Powell does leave on May 15, Jefferson would step in under the Federal Reserve Act, which says the vice chair serves in the absence of the chair and that board members continue to serve until their successors are appointed and qualified.
Of course, there’s another complication: The Federal Open Market Committee, which is the central bank’s rate-setting committee, elects its own chair and vice chair each year. Those roles are separate from the Fed Board of Governors’ chair and vice chair positions, which the president nominates and the Senate confirms.
In January, the FOMC elected Powell as its chair and New York Fed President John Williams as its vice chair through the first regularly scheduled meeting of 2027. Under the FOMC’s own rules, Williams performs the chair’s duties in Powell’s absence, with Jefferson entering the succession only if both Powell and Williams are unavailable. In other words, for rate decisions, the chain runs Powell, then Williams, then Jefferson.
That not only leaves open the question of who would hold each title, but how authority would actually be exercised if the transition stretches on. While this structure allows for distinctions between roles, in practice the Fed has avoided any meaningful split in leadership between the Board of Governors and the FOMC.
There is at least some historical precedent for a chair remaining in place beyond a formal term’s expiration date. In 1996, Alan Greenspan continued serving as Fed chair after his term expired, while awaiting Senate confirmation for another term. During that period, he effectively held over the role.
But that episode offers only limited guidance. The current situation raises a more complex set of legal and procedural questions, and there is no clear modern playbook for how a delayed transition would be handled if a successor isn’t confirmed in time.
The closest parallel is the 1978 Fed chair transition from Arthur Burns to G. William Miller.
Burns’ Fed chair term ended Jan. 31, 1978 but Miller wasn’t sworn in as his replacement until March 8. At the Feb. 28 FOMC meeting, Burns opened as chair and told the committee he had hoped Miller would be presiding that morning, but that Miller was testifying before Congress and hadn’t been voted in yet.
Burns remained in the FOMC chair role, and on a March 10 conference call he was again listed as chair—even though Miller had by then assumed Board-chair responsibilities. At that point, Burns proposed the committee elect Miller as FOMC chair on the spot. Miller said he hadn’t envisioned that would be the format.
By March 21, Burns was gone and Miller was formally installed as FOMC chair through a committee vote. Burns, for his part, had been lobbying senators throughout and warning publicly that the delay was damaging the Fed’s credibility.
The Fed is built to project continuity, even in moments of political strain. A delayed confirmation wouldn’t halt its operations, but it could introduce a degree of ambiguity that modern markets haven’t yet faced. At a central bank where credibility is one of its most important tools, even temporary uncertainty at the top carries weight.
Write to Nicole Goodkind at nicole.goodkind@barrons.com