Kevin Warsh moves to remake the Fed in 'velvet glove regime change'

Federal Reserve Chair Kevin Warsh has used his first weeks in office to set up task forces that will, in his words, « rethink virtually everything done at the Fed », according to CNBC. The publication calls the early moves a « regime change but in a velvet glove » — a quiet but comprehensive overhaul of the central bank.

The areas under review include the monetary policy framework, FOMC communications, and the supervisory regime applied to large banks. Warsh's earlier tenure as a Fed governor and his market-friendly speeches over the past decade offer a guide to the likely direction of travel.

Wall Street is watching closely. Large lenders such as JPMorgan and Goldman Sachs are positioning for potentially looser capital and stress-test rules, while bond investors are debating whether simpler forward guidance will lift or compress rate volatility. Warsh has not published a firm timetable, but CNBC notes the task forces are expected to report internally before the autumn FOMC meeting.