Trump’s team eyes overhaul of Fed leadership with key roles opening

Donald Trump’s crew is working overtime to shape the Federal Reserve into their version of a perfect economic machine. With some big names stepping down and even bigger decisions ahead, his advisers are busy sketching out a new look for the central bank.

Top on the agenda is elevating Michelle Bowman, a Trump-appointed Fed governor, to the powerful vice chair for supervision role. This follows Michael Barr’s surprise announcement that he’s stepping down from that very same role.

He’s not leaving the Fed entirely though—he’s holding on to his seat on the Board of Governors, where he can stick around until 2032. This puts Trump in a bit of a bind. Since Barr’s move keeps the seat tied to the current board, Trump’s choice for his replacement must come from within the Fed’s existing lineup.

Bowman in focus for top spot

Michelle Bowman is a fifth-generation banker with a Kansas-sized reputation for being tough on bank regulation. She has been critical of Basel III, an international framework designed to keep banks from falling flat on their faces.

She’s argued it would choke lending and isn’t the fix for a banking sector she says just needs better oversight. Bowman’s been a bit popular since Trump nominated her in 2018. She’s carved out her own lane as a hawk on inflation, even voting against a larger-than-usual rate cut in September.

That made her the first governor in nearly two decades to break ranks on the Federal Open Market Committee. Trump’s advisers see her as a strong candidate for not just one but potentially two top spots—vice chair for supervision and even the chair itself.

And she’s not the only name on the boardroom chalkboard. The list of possible replacements for Jerome Powell, whose term as Fed chair ends in May 2026, is long and filled with heavy hitters.

Trump’s advisers are throwing out names like Kevin Hassett, a current White House pick for the National Economic Council; Larry Lindsey and Marc Sumerlin, both former George W. Bush officials; David Malpass, the ex-president of the World Bank; and Kevin Warsh, a former Fed official with deep monetary policy roots.

Powell isn’t exactly Trump’s favorite guy these days. Though Trump picked him during his first term, the relationship quickly soured, with Trump calling some of Powell’s decisions outright “political moves.” Now, they’re basically archenemies.

Barr’s exit closes doors but leaves questions

Barr said on Monday that staying on and fighting with the incoming administration over the position wasn’t worth the hassle. “Even if I won, it would just be a huge distraction,” he admitted.

His exit creates uncertainty around a landmark proposal he championed that would’ve jacked up capital requirements for the biggest U.S. banks.

Barr was instrumental in pushing the plan forward alongside the Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC). The proposal, tied to the Basel III framework Bowman famously opposes, was meant to prevent another financial crisis.

With Barr gone, its future is hazy, and the Fed’s ability to maintain its regulatory course could be tested under Trump’s new appointees. During a press conference on Tuesday, the president promised a replacement for Barr would be announced “soon.”

But with Barr keeping his seat on the board until 2032, Trump’s choices are limited to the current governors. That pool includes Bowman, Christopher Waller (another Trump appointee), and Beth Hammack, the Cleveland Fed’s president.

Rewriting the Fed’s future

Hammack, a former Goldman Sachs heavyweight, is no stranger to high-stakes financial decisions. She’s already on the radar as a potential addition to the Fed’s board during Trump’s second term.

Hammack was a dissenting voice in December when the Fed opted for a quarter-point rate cut, pushing for more aggressive action. Her Wall Street experience and sharp dissenting votes make her a wildcard in Trump’s larger Fed makeover.

Christopher Waller, once seen as a rising star for the chair position, may be on thinner ice. His support for the controversial half-point rate cut in September drew Trump’s ire, with Trump dismissing it as a move to influence the election. Waller’s odds of landing the top job may have plummeted as a result.

While the Fed’s next official vacancy doesn’t arrive until Governor Adriana Kugler’s term expires in January 2026, there’s always the possibility that someone else steps down earlier. If that happens, Trump could use the opportunity to inject even more of his economic ideology into the central bank.

The Fed’s leadership decisions have massive implications for everything from inflation control to bank regulation to the stability of the broader U.S. economy. Trump’s choices could steer the Fed in a radically different direction, especially if his picks favor looser regulations or a harder stance on inflation.

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