Kevin Warsh says he still bears the scars from the “darkest days” of the 2008 financial crisis.

Then a new appointed Federal Reserve governor, Warsh acted as a key conduit between the central bank and Wall Street as the financial system and the US economy faced their worst threat since the Great Depression.

“He brings a lot of real experience, he knows these people on Wall Street – he knows the difference between when they argue their book and when they bring us good information – and that, very important,” said Don Kohn, the former vice-chair of the Fed who has an office next door. Wars.

It’s a view echoed by Lloyd Blankfein, who led Goldman Sachs during the crisis. “Kevin was unfazed by turbulent times,” she recalls, pointing to a similar demeanor and willingness to get along.

Nearly two decades later, Warsh’s ability to balance competing demands is set to be tested like never before when Donald Trump nominated him on Friday to replace Jay Powell as Fed chair.

Warsh will lead the world’s top central bank during one of the most important periods in its 112-year history.

The 55-year-old had to fight Trump’s campaign for lower interest rates and investors’ fears for central bank independence.

In an early sign that investors are confident that Warsh will not scare the White House into aggressive rate cuts, the dollar rose on Friday.

Warsh’s voting record on monetary policy when he was a Fed governor between 2006 and 2011 bolstered investor confidence.

Mohamed El-Erian, who heads fixed-income asset manager Pimco and knows Warsh, said: “I feel he knows more and I’m comfortable with most of his views.”

He added that Warsh was the last Fed governor who “made a significant effort to understand market developments”.

That’s not the only Wall Street relationship Warsh has forged in a four-decade career that began in 1995 as an investment banker at Morgan Stanley. In 2002, he traded Wall Street for government, joining the George W Bush administration as an economic adviser.

That same year, marriage to Jane Lauder, a member of the billionaire family behind the Estée Lauder cosmetics empire, strengthened his ties to the Republican establishment. His father, Ronald, who is close to Trump, was the US ambassador to Austria under Ronald Reagan.

Bush’s selection of him as Fed governor in 2006 made the 35-year-old the youngest nominee to the central bank’s board.

But it was a different kind of Republican president that landed Warsh, who was born in the New York state capital of Albany and studied at Stanford and Harvard universities, in a job he had long sought.

According to people familiar with the matter, Trump considered Warsh as Fed chair before nominating Powell in 2017. After Trump’s election victory in 2024, Warsh was even on the president’s radar for the role of US Treasury secretary.

As Trump assembled his second-term cabinet, Warsh was summoned to a meeting at the president’s Mar-a-Lago resort in Florida after Elon Musk argued that appointing Scott Bessent would be “business as usual”.

While the Treasury role ultimately went to Bessent, Warsh has won admirers within the Trump administration for pushing for “fundamental reform” of an institution he believes has outgrown its mandate.

Last April, as global markets reeled from Trump’s trade war, Warsh used a speech at the influential Group of 30, a group of former central bankers and top financiers of which he is a member, to target the Fed.

Warsh argues that “the changes in the role of the U.S. central bank are so extensive that they are almost invisible. The Fed has a broader role within our government in all matters of economic policy.”

Some of Warsh’s sharpest barbs have been aimed at the policies he helped shape, particularly the central bank’s massive bond purchases. Warsh resigned as Fed governor in the spring of 2011, just months after the central bank voted to buy more bonds.

“In my view, the forays away – for all times and for all reasons – that led to systematic errors in the conduct of macroeconomic policy,” he said.

If he is confirmed by the Senate, Warsh will join a US central bank that is divided over whether to prioritize fighting inflation or supporting a weakening job market.

Alan Schwartz, who led Bear Stearns during the financial crisis and is now executive chair of Guggenheim Partners, said he was confident Warsh would be able to corral a consensus on the board.

“That’s one of the requirements to be a Fed chair,” he said. “You can’t be a dictator about policy.

The Fed has cut rates three times by 2025. But officials signaled this week that, with inflation well above their 2 percent goal, the bar for further action is high. In the range of 3.5 to 3.75 percent, interest rates remain significantly higher than the 1 percent level that Trump wants.

Like all the other candidates interviewed for the role, Warsh admitted there is room for more rate cuts.

His calls for the US central bank to revisit the Treasury-Fed Accord of 1951, the template on which the Fed’s independence from the executive branch is based, echoed Bessent, who Warsh says is close.

But they rankled with central bank insiders who saw his fierce attacks against the institution as unfair. They also believe that some of Warsh’s claims, such as a view that the central bank should shrink its balance sheet, are ill-conceived.

Kohn said that while he was “all for bringing new thinking and making things better”, he questioned the merits of some of Warsh’s ideas.

“Some – although not all – of the criticisms he had had a kernel of truth about them, but then they were taken too far,” the former vice chairman, now at the Brookings Institution think-tank, said. “But he knows the institution. And I think he respects the history of the institution.