Fed Chairman Kevin Warsh Testifies Before Senate Banking Committee on AI and Inflation

Federal Reserve Chairman Kevin Warsh testified before the Senate Banking Committee on Wednesday. Sen. Elizabeth Warren questioned Warsh about his divestment of more than $100 million in assets before taking office and asked who provided a check for that amount days before he entered office, suggesting it may have been Stanley Druckenmiller.

Warsh stated he has fully sold or was in the process of selling his assets and has honored all obligations from the Office of Government Ethics. Warren said Warsh's response was not an answer. She also questioned him about a Wall Street Journal report that Fed Vice Chair of Supervision Michelle Bowman spoke at an invite-only Bank of America dinner last month during a blackout period.

Warsh stated he was not at the dinner and does not know the facts, adding that he plans to leave the matter to the Fed’s Office of Inspector General. Warren has called on the inspector general to investigate Bowman and asked Warsh three times whether he had questioned Bowman about the event. Warsh replied that it would be inappropriate to pre-judge facts.

Warren stated the tone Warsh is setting invites corruption and accused him of being in President Trump’s pocket, noting that Trump said he would only nominate a chairman who promised to lower interest rates. The Federal Reserve kept interest rates in the 3.5% to 3.75% range at its meeting last month. Later in the hearing, Sen.

Mike Rounds of South Dakota gave Warsh time to respond. Warsh stated no one gave him $100 million. During the testimony, Warsh said artificial intelligence is the most consequential change to the U.S.

And global economy in his adult lifetime. He added that AI is not without challenges but that the United States is in the best position worldwide to benefit from it. Warsh stated AI will improve American productivity, real wages, and help on full employment in the long term, though it can have a disruptive effect in the short term.