Correction to Trump Meets With Warsh Article

By Michael C. Bender Features Dow Jones Newswires

President Donald Trump and Treasury Secretary Steven Mnuchin met with former Federal Reserve governor Kevin Warsh on Thursday to discuss his potential nomination as the next Fed chairman, a White House official said, signaling that the West Wing is moving ahead with a process that the president has said he would like to have completed by the end of the year.

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Other names said to be in contention include current Fed Chairwoman Janet Yellen, Stanford University economist John Taylor and John Allison, the former BB&T Bank chief executive, according to people familiar with the process. Mr. Allison was offered a position on the central bank's board of governors earlier in Mr. Trump's tenure, but turned it down, said people familiar with the offer.

Mr. Warsh was a member of the president's Strategic and Policy Forum, a group of business leaders that disbanded in August in protest over what they said was Mr. Trump's failure to sufficiently condemn racism. He was also an economic adviser to 2016 Republican presidential candidate Jeb Bush, who was considered the front-runner for the nomination before Mr. Trump's political rise surprised the political establishment.

Mr. Warsh, a veteran Republican economic policy maker, is married to Jane Lauder, granddaughter of cosmetic icon Estée Lauder. His father-in-law, businessman Ron Lauder, has been lobbying the White House to have the president name his son-in-law to the central bank's highest post, said people familiar with those conversations.

The search for a new Fed chairman, which Mr. Trump told The Wall Street Journal in July he hoped to complete before the new year, has been largely informal until now. Several White House officials had described the short-list of candidates as existing only in Mr. Trump's own mind. But the president has started to interview candidates in recent days, one White House official said.

A White House spokeswoman didn't immediately return a request for comment. Mr. Warsh also didn't immediately return a request for comment.

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Mr. Trump has said he would be willing to reappoint Janet Yellen, whose term ends in February. She met with White House adviser Ivanka Trump, the president's daughter, in July and had a 15-minute meeting with Mr. Trump in February. She said at a press conference last week she hasn't met with Mr. Trump since then.

Mr. Trump also expressed interest in nominating Gary Cohn, the director of the National Economic Council, during his July interview with the Journal. But Mr. Cohn's public criticism of Mr. Trump's response to the racially charged violence in Charlottesville, Va., made it unlikely the president would nominate him to the position, people familiar with the president's thinking told the Journal earlier this month.

White House officials, however, have cautioned that Mr. Cohn, a former Goldman Sachs executive, may be able to repair his relationship with the president. Mr. Cohn is one of the key administration hands shepherding an overhaul of the federal tax code through Congress. If successful, Mr. Cohn may find himself in better standing.

In an April interview with the Journal, Mr. Trump said he also was considering Ms. Yellen. Every president since Ronald Reagan has asked the standing Fed leader to stay in the job at the start of his presidency, which has served to underscore the central bank's relative independence from politics on monetary policy.

If Mr. Trump doesn't follow that pattern, Ms. Yellen would be just the third Fed leader since 1934 to serve only one term.

A former member of Morgan Stanley's mergers and acquisitions department, Mr. Warsh was on the Federal Reserve board during the financial crisis that started to unfold in 2007.

Mr. Warsh has been a critic of the Fed's aggressive monetary easing, warning that it increases risk of a financial bubble. He has called for broad changes in how Fed officials communicate with each other and the public, and has urged policy makers to overcome what he calls groupthink in academic economic circles.

"The conduct of monetary policy in recent years has been deeply flawed," Mr. Warsh wrote in an opinion piece published in The Wall Street Journal in August 2016, citing the weak economic growth of recent years. He called for "a rigorous review of recent policy choices and significant changes in the Fed's tools, strategies, communications and governance."

Mr. Warsh also has disagreed with Republicans who have pushed for additional oversight of the Fed's decision-making. But in June, at a public event in Dallas, he suggested the Fed could be at risk of being dismantled if it doesn't make needed changes from within. "The idea that we [the Fed] are a permanent fixture in the economy is mistaken," he said.

Before his term on the Fed, Mr. Warsh was a member of then-President George W. Bush's National Economic Council. After leaving the Fed, he became a visiting fellow at the Hoover Institution, a policy think tank affiliated with Stanford University.

Write to Michael C. Bender at Mike.Bender@wsj.com

Corrections & Amplifications

This item was corrected at 4:14 p.m. ET to show that Kevin Warsh wrote an opinion piece published in The Wall Street Journal in August 2016, not last month.

"The conduct of monetary policy in recent years has been deeply flawed," Kevin Warsh wrote in an opinion piece published in The Wall Street Journal in August 2016. "Trump Meets With Kevin Warsh About Fed Chairman Job -- 2nd Update" at 10:25 a.m. EDT, incorrectly stated the piece was published in August 2017 in the 14th paragraph. (Sept. 29, 2017)

(END) Dow Jones Newswires

September 29, 2017 16:28 ET (20:28 GMT)