The drama over who gets the keys to the world's most powerful central bank just took a massive turn. Honestly, if you were betting on Treasury Secretary Scott Bessent to take the lead at the Federal Reserve, you might want to check the latest from the White House. Donald Trump officially confirmed that he’s moving on. Scott Bessent is out.
It’s not often a frontrunner just vanishes from the shortlist, especially when they’re already sitting in one of the most senior economic posts in the country. But here we are. Trump basically told everyone that after a late-night chat, it became clear that Bessent wasn’t the guy for this specific job—not because of a lack of talent, but because he’s supposedly happy exactly where he is.
Why Trump Drops Scott Bessent From Federal Reserve Chair Consideration
So, why the sudden change? If you listen to the public version of the story, it’s all very amicable. Trump told CNBC that he asked Bessent point-blank if he wanted the Fed chair role, and the answer was a flat "nope."
"I love Scott, but he wants to stay where he is," Trump said.
It sounds simple. Maybe too simple for Washington.
Bessent has been the architect of some of the administration's biggest swings, particularly on trade and tariffs. He’s been jetting off to places like Sweden to negotiate with Chinese officials, trying to nail down tariff extensions before deadlines hit. When you’re the guy leading the charge on the "America First" trade agenda, moving to the Fed—a place that's traditionally supposed to be boring and independent—might feel like a demotion or at least a distraction.
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The Real Shortlist Now
With Bessent out of the way, the race to replace Jerome Powell is basically a four-way sprint. We aren't talking about mystery names anymore. We have a clear list:
- Kevin Warsh: The former Fed governor who’s basically the betting market's darling right now. He’s seen as the "independent" pick, which is funny because he's also been a loud critic of how the Fed has been run lately.
- Kevin Hassett: Trump’s top economic advisor and current head of the National Economic Council. He’s the ultimate loyalist, but some say his chances are wobbling because of the intense political heat surrounding the Fed right now.
- Christopher Waller: A sitting Fed governor who has actually voted for rate cuts recently, which obviously puts him in Trump’s good graces.
- Rick Rieder: The BlackRock heavy hitter. He’s the wildcard, the "Wall Street" pick who hasn't been fully interviewed yet but is scheduled to sit down with Trump soon.
The Jerome Powell Factor (and the "Shadow Chair" Rumors)
You can't talk about Trump drops Scott Bessent from Federal Reserve chair consideration without talking about the guy who still has the job: Jerome Powell. Powell’s term doesn’t actually end until May 2026, but the relationship between the White House and the Fed is, well, toxic.
Lately, things have gone from "mean tweets" to "legal subpoenas." There’s a full-blown criminal investigation into Powell over $2.5 billion in renovation costs at the Fed's headquarters. Powell isn't taking it lying down; he released a video basically saying this is all a political hit job because he won't lower interest rates on command.
This chaos changes the math for someone like Bessent. If the Fed is about to become a legal and political battlefield, staying at Treasury—where you have a clear mandate and the President's full backing—looks a lot more attractive.
Bessent has even reportedly told people he’s "unhappy" with the criminal probe into Powell. He’s worried it’s going to freak out the markets. And he’s probably right. The Dow has been jumpy, and having your Treasury Secretary and your Fed Chair at odds during a legal investigation is a recipe for a headache.
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What Most People Get Wrong
A lot of folks think Bessent was "fired" from the consideration list. That’s not really how it looks from the inside.
Bessent is actually the one vetting the other candidates. Think about that for a second. He’s the guy helping Trump pick the next chair. You don't let someone do that if they're in the doghouse. By stepping aside, Bessent keeps his power at Treasury and maintains his influence over who eventually gets the Fed job. It’s a classic power move.
What This Means for Your Money
When the President changes his mind about the Fed, the markets notice. The Fed controls the "price" of money (interest rates). Trump wants those rates low. Like, yesterday.
Bessent was seen as a "higher for longer" skeptic, but he was also a pragmatist. With him out, the focus shifts to whether Trump will pick a "loyalist" like Hassett or a "hawk" turned "pragmatist" like Warsh.
If Trump goes with a loyalist, expect the Fed's independence to be the biggest story of 2026. If the markets think the Fed is just doing whatever the White House says, inflation expectations could start creeping back up. That means your mortgage, your car loan, and your credit card debt are all hanging in the balance of this search.
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The Next Steps for the White House
Bessent has signaled that an announcement is coming soon—likely around the time Trump heads to Davos later this month.
The Senate is already grumbling. Senator Thom Tillis has basically said he’ll block any nominee until the legal mess with Powell is cleared up. That’s a huge hurdle. Even if Trump picks a superstar, they might get stuck in a confirmation swamp for months.
Actionable Insights for Investors
If you're trying to navigate this, don't just watch the headlines. Watch the yields.
- Monitor the 10-Year Treasury: If Kevin Warsh gains more momentum, markets might price in a more "traditional" Fed. If Hassett surges, look for volatility in inflation-protected securities (TIPS).
- Watch the Davos Speech: Trump usually tips his hand when he’s on a global stage. Any mention of "monetary sovereignty" or "interest rate relief" will be a signal of which way he's leaning for the nominee.
- Don't count out Rick Rieder: The BlackRock connection is strong. If Trump wants someone who "speaks Wall Street" to calm the markets during the Powell investigation, Rieder is the logical choice.
The fact that Trump drops Scott Bessent from Federal Reserve chair consideration doesn't mean the drama is over. It just means the board has been reset. We’re moving into a phase where the Federal Reserve isn't just an economic institution anymore—it’s the center of a political hurricane.
Keep an eye on the Senate Banking Committee hearings. That’s where the real "Kevin vs. Kevin" (or Waller, or Rieder) battle will be won or lost.