A fiery exchange erupted as Rep. Maxine Waters questioned Federal Reserve Chair nominee Kevin Warsh over the Fed's independence and raised concerns about a “pattern of insider profits” ahead of major market-moving decisions. Warsh pushed back, insisting the Federal Reserve must remain independent despite political pressure. The tense hearing reignited debate over insider trading, financial transparency, ethics, and the future direction of U.S. monetary policy.
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What Kevin Warsh said
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Kevin Warsh, Chairman of the Federal Reserve, testified before Congress, responding to Ranking Member Maxine Waters' questions about presidential conflicts of interest and Fed independence. Warsh repeatedly declined to comment on rules for others outside the Fed, saying 'we're going to stay in our lane' and focus on the Fed's job. He confirmed the Fed will follow the law regarding board members' stock prohibitions. On insider trading, Warsh said he sent a letter to the Fed's 23,000 employees in his first week, emphasizing integrity and legal compliance. He discussed his five task forces, which are in 'discovery mode' and will produce public reports by year-end. On balance sheet policy, Warsh stated it is part of monetary policy, promised advance notice of any changes, and stressed the Fed must stay clear of fiscal policy. He noted the Fed's average Treasury duration is about six and a half years versus four and a half years in the market.
Key takeaways
Warsh said the Fed will 'stay in our lane' and not opine on rules for others outside the Federal Reserve, including the president.
Warsh sent a letter to the Fed's 23,000 employees in his first week, emphasizing integrity and legal compliance.
Warsh stated the balance sheet is part of monetary policy and promised advance notice of any changes.
Warsh said the Fed's five task forces are in 'discovery mode' and will produce public reports by the end of the year.
Warsh noted the Fed's average Treasury duration is about six and a half years, versus four and a half years in the market.
Numbers and commitments
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What it refers to
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23,000
Fed employees who received Warsh's letter on integrity
0:26Yes or no, do you think that's a sensible prohibition?
1:43Chair Warsh, should those officials be prohibited from owning any businesses where they have a role in regulating them, whether it is a crypto company or bank or anything else? Yes or no?
3:12So, let me ask you, do you believe we must put an end to it?
4:22And given the rise of prediction markets, is the Fed increasing its oversight for its employees profiting from the use of material non-public information?
6:11How do you envision presenting the results of these findings, Mr. Chairman?
7:36Would you make it clear to the markets when shrinking the balance sheet is intended to tighten monetary policy rather than a deregulatory effort to avoid market distortions?
10:05How are you thinking about financial stability and the threat of fiscal dominance as Congress fails to get spending under control while the demand for our debt, including the Federal Reserve, continues to change?
There's a pattern of insiders appearing to profit ahead of market-moving Trump administration decisions. What oversight does the Fed conduct over its employees with regard to insider trading? If you get a call from the president and he said, 'I'm firing you. Pack up and it's time to go.' What would you do? But thank you, Mr. Chairman. Chair Warsh, Section 10 of the Federal Reserve Act states, and I quote, 'No member of the Board of Governors of the Federal Reserve System shall be an officer or director of any bank, banking institution, trust company, or Federal Reserve Bank or hold stock in any bank, banking institution, or trust company.' Quote, unquote. This prohibition ensures there's no conflict of interest arising from your role in making decisions as a regulator that could lead to your personal profit. Yes or no, do you think that's a sensible prohibition?
Let me keep going. Vice Chair Bowman and FDIC Chair Hill testified last year that this prohibition is good public policy as it ensures that bank regulators serve the public's best interest and not their own. Now, unfortunately, President Trump undermined the independence of financial regulators, mandating the White House must now review and approve regulatory rules put forward by banking regulators, including the Fed, except when it comes to monetary policy. And instead of focusing on the job Americans elected him to do, the president is grossly profiting off of his position to the extent the president and other executive branch officials now have a say in regulations the Fed issues. Chair Warsh, should those officials be prohibited from owning any businesses where they have a role in regulating them, whether it is a crypto company or bank or anything else? Yes or no?
So, Ranking Member Waters, I don't mean to disappoint you, but we're going to stay in our lane at the Federal Reserve. The more we stay in our lane, the more we stay out of politics. The rules and obligations for others outside the Federal Reserve are not something at which I feel it's appropriate for me to opine.
I have here President Trump's most recent financial disclosure, which shows that Trump made billions of dollars in the first year of his presidency, the bulk of which came from his family's crypto businesses, all while he is responsible for overseeing the agencies regulating crypto. This is an egregious conflict of interest, and Congress must put an end to it. Now, I want to just show you, in case you haven't had time to look yet, that this is the president's disclosure of his financial interest. This is how many pages? 900. This is 900 pages of financial interest. When you have time, I want you to go through them so that you'll know and understand exactly what I'm talking about. So, let me ask you, do you believe we must put an end to it?
Well, let me just go further with the prediction markets. I'm deeply concerned by the potential for regulators to profit from the use of material non-public information on prediction markets. There's a pattern of insiders appearing to profit ahead of market-moving Trump administration decisions, like when officials with close ties to the administration make trades prior to major tariff announcements. Chair Warsh, what oversight does the Fed conduct over its employees with regard to insider trading? And given the rise of prediction markets, is the Fed increasing its oversight for its employees profiting from the use of material non-public information?
12 more exchanges in this transcript
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Warsh, K. (2026, July 14). ‘I don’t want to disappoint you but…’: Kevin Warsh clashes with Waters over independence of fed [Interview transcript]. The Economic Times. CEOInterviews.AI. https://ceointerviews.ai/interview/2933347/
MLA
Kevin Warsh. "‘I don’t want to disappoint you but…’: Kevin Warsh clashes with Waters over independence of fed." The Economic Times, 14 Jul. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/2933347/.
BibTeX
@misc{warsh2026_2933347,
author = {Kevin Warsh},
title = {‘I don’t want to disappoint you but…’: Kevin Warsh clashes with Waters over independence of fed},
howpublished = {Interview transcript, The Economic Times. CEOInterviews.AI},
year = {2026},
month = {jul},
url = {https://ceointerviews.ai/interview/2933347/},
note = {Speaker-attributed transcript with timestamps}
}
