What To Expect With New Fed Chair Kevin Warsh?

Powell's out. Kevin Warsh is in. And it's not just a new name at the podium, it's a completely different communication philosophy for the Federal Reserve.

Kyle Campbell, who covers the Fed for American Banker, joins the show to break down what Warsh's "say less, smile more" approach means for banks, fintechs, and markets that got used to the Fed spelling everything out.

What We Cover...

The Philosophy Shift:

Kyle explains why Warsh's first press conference looked so different from the Powell era, and what it means when the Fed intentionally pulls back on forward guidance.

Why is the fed saying less?

The Fed's policy statement went from three or four hundred words down to about 130. Kyle breaks down what got cut and why.

What are Reserve Bank Presidents?

A look inside how the FOMC actually votes, who rotates on and off, and why regional perspectives matter more than people realize.

Is Warsh a "Sock Puppet" for Trump?

Kyle's take on Warsh's independence, and how his first vote compared to what happened under short-term board member Stephen Miren.

What is Greenspan's legacy?

The Great Moderation, the subprime years, and what Kyle's sources including former Fed vice chairs Don Cohn and Alan Blinder say about Greenspan's gift for telling the right story at the right time.

How does the Fed look at AI?

What Kyle would ask Warsh off the record about AI as a productivity driver, and why that answer matters for inflation and the deficit.

Key Takeaways

• The Fed under Warsh favors reacting to markets over directing them
• Less forward guidance can mean more uncertainty for lending and credit conditions
• Regional Reserve Bank presidents play a bigger role in FOMC decisions than most people assume
• Greenspan's era shows both the upside and the risk of a Fed chair with real cultural influence

Timestamps

• 00:00 – The philosophy shift under Warsh
• 02:37 – What got cut from the Fed statement
• 10:23 – How reserve bank presidents vote
• 15:45 – Warsh's independence from Trump
• 18:12 – Alan Greenspan's legacy
• 28:34 – What Kyle would ask Warsh off the record

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About Our Guest:

Kyle Campbell covers the Federal Reserve and bank regulation for American Banker, with a growing focus on emerging risks across AI and crypto in the financial system.

Want to work with Propagate Fintech? Fill out a contact form at www.propagatefintech.com

Transcript

SPEAKER_01 0:00

What's up, y'all? We got a new guy running the Fed. Pal's out, Warsh is in. And if you're thinking, okay, cool, new guy, same job, no big deal, you might want to zoom out for a sec, because there is a pretty major philosophy change underway here. For years, the Fed's playbook was pretty simple. Tell the market everything, explain the thinking, paint the picture so clearly that nobody has to guess what happens next. Well, the new approach is stay less, smile more, which is an old playbook from Greenspan's time, RIP. Now here's why you should care, even if you've never read a Fed statement in your life. Less guidance from the Fed means more uncertainty in the market. And uncertainty doesn't come without a price. It shows up in lending, rates, and how conservative or aggressive banks and fintechs are getting with credit. So to break this down, I brought in an expert who covers this for a living, Kyle Campbell with American Banker. We get into all of it. Greenspan's instincts, the subprime years, what say less really means for banks and fintechs, trying to plan around a Fed that's gone quiet. Check it out. So there's a big change at the Fed. Powell's out, Walsh is in. What are your thoughts with what we've seen so far?

SPEAKER_00 1:05

Yeah, so from new Fed chair Kevin Warsh, the mantra has been uh say less and smile more. If I can sort of borrow a line from Hamilton. Uh he had his first press conference a few weeks ago. He was very uh cordial, he was sort of engaging, he wasn't really ominous or anything. He had a sort of a welcome air about him, but he repeatedly uh declined to go into anything that could be perceived as forward guidance. So he didn't want to say anything forward-looking at all. Um, and that that is definitely a noteworthy change from what we saw during the Powell years, where typically, even though Powell didn't want to sort of lock in on any one specific course for future policy actions, he would always try to sort of engage with the question being asked in some way and try to, if not say what's gonna come next, give some color into what the Fed is thinking now about what just happened, if that makes sense. So sort of tell a story about how the economy has developed. Uh Warsh was very, very um controlled, very deliberate, and really stuck to his guns on this idea of, you know, we're not gonna say any more than we have to. And I think that's that's gonna be sort of the the running theme, at least for the next little while.

SPEAKER_01 2:20

Interesting. So Powell was more open with respect to the playbook, kind of some of the internal levers. If this happens, then that will happen, and then we'll kind of react in this way. Whereas Warsh is keeping it more close to the vest. And he doesn't see the Federal Reserve's job being directing markets.

SPEAKER_00 2:41

That's right. Yeah, he's taken an approach where he would actually like to have the Fed respond to markets, which is to say, you know, if he sees the bond market, uh yields are moving in a certain direction, indicating traders, market participants are feeling a certain way about inflation, that the Fed is going to react in a way that maybe brings markets back towards what its preference is, without directly saying this is what we're doing. Whereas under Powell, the the playbook was really let's be very clear about what we see developing and take away some of the legwork for markets and take out some of the guesswork where they have to say, oh, what do we think the Fed's gonna do? Let's try to anticipate. It's like, no, no, just listen, we're gonna tell you what we're thinking, and you follow suit. With Warsh, it's let's sort of have a lighter touch, let markets play out as they will, and then if we need to, then we'll step in. Got it.

SPEAKER_01 3:37

So the Fed makes a statement, which you talked about in the article, which is generally, you know, three to four hundred words. It was cut down to 130. What would you say has been removed from that statement?

SPEAKER_00 3:49

Yeah, it's actually, you know, it's been a lot of sort of superfluous language or or things that are just sort of um truisms, as that's how it was sort of described to me. You know, like we we believe that price stability is good. You know, sometimes there'll be nods to things like conflicts abroad, uh, just sort of an acknowledgement of certain conditions that uh no one's really going to contest. But at the same time, if the Fed, you know, in the past, there was a perception if they if they sort of cut that language out, they would have to sort of explain why they're no longer saying these things. So it's this weird uh handcuffed situation where you know every time the Fed adds something to that official policy statement, they feel like they have to either continue to say it or have uh an explanation ready for why they didn't say it. So in this case, I think if this was a bit of war wiping the slate clean, so to speak, saying, okay, we're gonna give the most bare bones uh message we can. We're gonna be very emphatic that we're gonna get you know price stability back where we want it, which is to say we're gonna get inflation back to 2%. And yeah, and that's it. Here's our decision, here's the vote, gonna get back to 2%, and we're done.

SPEAKER_01 4:56

It seems like such a great idea to be very Spartan in the language that you use. What would critics say to this new strategy compared to what Powell did?

SPEAKER_00 5:08

Yeah, I think the main criticism, if there's too much of a pullback on communication, we start to get back into kind of an older model of central banking, in which the central banker in charge, you know, be it the Fed or or another central bank, uh, let their actions in the market dictate what happens and allow the sort of markets to figure that out for themselves. So, which is to say that sometimes you you'll probably get to the same endpoint, but you might have a bumpier ride to get there. And I guess the the argument is that there's not a very strong reason for not providing that sort of smoothing effect. You know, so you're you're intentionally uh creating a scarcer information environment, creating more opportunities for things to kind of go awry. Uh the counter to that counter would be well, sometimes people hear the Fed's message loud and clear, they react and then conditions change, and there's a sort of moment of like, okay, like the if you're the Fed, what do you do? Do you react how you would in a vacuum, or do you react how you would to sort of stay on the path you've set? So it's it's about getting locked in, is the concern that they're trying to address. Uh, and again, like the sort of criticism is well, you're creating a lot of uh uncertainty unnecessarily.

SPEAKER_01 6:24

Okay, got it. My perspective on this, and I could be totally wrong, I admit that, but it seems like this is going to introduce more conservative decision making in markets. Is that good or bad? Is that is that an accurate take on things?

SPEAKER_00 6:42

Yeah, I think that that's that is a very real possibility that markets have to become a little more conservative. They have to sort of do their own work a bit more uh because when when you have a higher level of confidence about where things are going to go and you feel that there's some sort of mechanism in place that's gonna commit the Fed, for instance, to stay the course, you might allow yourself to play things a little bit looser. Whereas if you have to sort of really be buttoned up for whatever comes next, you might become more conservative. Uh, and I don't think that that's a bad thing in the sense that you always want financial markets to be acting rationally and doing things deliberately. But at the same time, anytime there is sort of friction, you know, there's a there's a risk. There's a risk that there's some sort of a hiccup, that there is a disconnect. And let's say markets get ahead of the Fed for some reason. Maybe they think for whatever reason that rates are going to go down. And so they start pricing that in, credit gets easier to come by. Maybe that's good for the the the near-term business cycle, but then maybe it leads to uh sort of overexuberance, making bad loans, etc. In the in the inverse, maybe markets feel like you know, we're there's gonna be an increase in rates, maybe we need to sort of tamp down on lending, and you have this pullback and a tightening of credit that prevents business from flowing as it should. So whatever happens, like there's risks that come about. So uh hopefully there is a more conservative approach to avoid that and you don't see wild swings. Uh, but we'll have to we'll have to see how that plays out in the market.

SPEAKER_01 8:22

We'll see. We'll see. Yeah. So your article, you know, I'd say it's probably a five to ten minute read for most people. You do a good job of covering a pretty big cross section of time of the Fed, which which was interesting. I mean, you go back to Alan Greenspan, R.I.P, big one Hundo. Yes. Big, those are some big shoes to fill for anybody, you know, coming in after him. Yeah, the maestro, as they say. The maestro. I was reading some of his quotes over the years, and like what a what a character. But uh talk to me about the people who you spoke with to help you make sense of these big spans of time with the Fed leadership.

SPEAKER_00 9:04

Yeah. So uh I've got three people quoted in the article. Uh two of them were former vice chairs of the Federal Open Market Committee. Uh, one was Don Cohn, who uh worked with Alan Greenspan directly. Um wow. Cool. Yes, yes. And actually, uh he was probably one of the closer members of the board to him at one point in time. Uh so he he gave a uh some pretty good perspectives about how uh Greenspan approached the Fed and how communications evolved under his leadership. Uh then uh Alan Blinder, who also was vice chair uh briefly uh alongside Greenspan, which just kind of goes to show how long Greenspan was uh around and in power for. But um, Blinder was one of the early sort of reform advocates for uh sort of Fed communication, sort of opening. Uh, you know, he he favored a more open approach. And so I thought he was an important voice to get in this article. And then I also uh spoke with uh Jeff Lacker, who is a former uh Federal Reserve Bank president um from the the Richmond uh Reserve Bank. And I think it's important to have that perspective as well, because you know, the Fed has a very uh unique structure where you have members of the of the Federal Open Market Committee, the sort of monetary policy board who are with the the board of governors in DC. And then you also have representatives from throughout the system. And uh, you know, those are those being the sort of reserve bank presidents. So I wanted to talk to a reserve bank president who could kind of give his share his views on on what it means to have like a robust communication policy, because sometimes individual reserve banks may have different views on how the economy is is playing out based on what's going on in their part of the country. So so it's important to you know to know how that might factor into to a new communication system.

SPEAKER_01 10:59

Makes a lot of sense. That's kind of textbook good journalism. You're getting uh perspectives from very seasoned, those those are some awesome contacts. Yeah. So I think people who listen to this show have a pretty decent handle on what the Fed does. But what's the role of these local regional bankers as it relates to Walsh and how Warsh's team makes decisions?

SPEAKER_00 11:22

Yeah, so it's it's a really interesting question and it's sort of evolved over the years. Um, the sort of, you know, the short version is that these uh reserve bank presidents play a direct role in monetary policy because they're um one, they they have a vote about the the rate, the policy decision on a rotating basis. So every year there's a new set of uh reserve bank presidents that get to cast a vote. Um there's in total, uh there are 12 reserve banks. There's five seats on the FOMC. There are four Reserve Bank presidents. Uh New York is on at all times. Uh Chicago and Cleveland rotate, and then the other nine reserve banks are on a sort of like a uh a one-year-on, two-year-off rotation. So they are you know casting votes directly on the the policy rate and the statement about that policy. Uh, but even if they're not casting a vote, they're still in the room during uh the sort of every six-week meeting of the FOMC. So they're all playing a role in crafting not only the policy, but how uh that policy gets conveyed. And and if you have a vote, you know, sometimes you may vote against a statement because you just don't like the verbiage. We saw that you know a couple months ago with um a couple Reserve Bank presidents voting against uh the last policy statement under Powell, actually, because they said that they wanted, you know, like one line removed from the statement, and the rest of the group did. So you you see that playing out in a very real way. Um and again, there's different different philosophies about this. Some say it's important to articulate those different views because it shows the market that, hey, like there are a range of possibilities we're considering. Things could go this way or they could go this other way. Uh, some people say, hey, actually, you want to be, you know, as united as you can so that there isn't that kind of un, that's that sort of uh shakiness that may cause one part of the market to do one thing and another part to do something else. So again, different philosophies, and and we'll see during Warsh's tenure how accepting he is of dissents and of people expressing different opinions. Um obviously it's a it's a committee and people are gonna vote how they're gonna vote, but you've seen different approaches uh in the past. Some people who are really sort of uh coalition based and trying to get as many people to vote yes as possible. And you've seen other Fed chairs who are are seem to be a little more tolerant of dissent and just they're saying, hey, we're gonna vote on it, do what you will. And so yeah, we'll see what we'll see what kind of chair Warsh is in that respect.

SPEAKER_01 14:08

How politicized do you feel like the the Fed is today compared to you know other eras?

SPEAKER_00 14:16

It's hard to say exactly how it compares to other you know chapters of history because so much of what the Fed does happens behind uh closed doors. And until recently, we weren't we we did not really have the same sort of access to uh some of the Reserve Bank presidents, and and you know, certainly governors weren't speaking their minds as freely. So they didn't have Twitter before they didn't they didn't have Twitter, that's right, no 24-hour news cycle. Uh you know, the there wasn't an equivalent of like, you know, whatever cable business channel you watch, you know, sort of setting up a call with you know the Reserve Bank uh president in Kansas City, you know, but that might happen today, you know, just because they want to speak their mind. Um so but I I would say that outside the institution, uh, you've had a lot of pressure directly from the president. Uh we actually had a decision just this week about um the lawsuit involving the president's attempt to fire one of the governors of the Federal Reserve Board. And so that that just shows how there is a lot more scrutiny uh on the institution from the outside. Internally, you know, as far as the politics go, again, it's it's sort of hard to say. Um, you know, certainly you've had for a long time boards of governors that are comprised of uh of people appointed by Democrats and Republicans, right? You've got on this board some people who were appointed by Biden, some people were appointed by Trump. Jay Powell himself was originally an Obama appointee. So again, it'd be like these things span a long time. But they're not really, they're not partisans in the same way that other uh you know, sort of agencies are. They're not really voting to keep a certain constituency happy. So, you know, internally, I'd say that it's probably a little bit status quo. But again, we'll sort of see how that plays out in the months and years ahead. If this is uh, you know, a board that has a lot of dissents, maybe it is actually more fractious and and kind of reflecting what's happening on the outside. Uh, but you know, for Walsh's first vote, it was unanimous. It was actually the first unanimous vote by the the board in several meetings. So maybe, maybe, maybe it's uh maybe they're kind of finding common ground more so than uh you know the outsiders would have expected.

SPEAKER_01 16:30

So, Kyle, let me ask you about uh Warsh's relationship with Trump. I think he famously said, I'm not gonna be a sock puppet for Trump, but is is Warsh a reliable person for Trump? I think is how Trump might phrase that.

SPEAKER_00 16:44

Yeah, yeah. Is there a loyalty test involved? That's that's hard to say. Um, you know, what I think is clear is that we saw, you know, in his first meeting and first press conference that he wasn't just going to immediately, you know, go in the direction that Trump wanted, which was, you know, towards lower rates. He is going to be, you know, he's gonna react to the conditions around him. Um if we get into a situation where things are a little bit more marginal, I mean, just as context, you know, he came his first meeting, you know, in inflation had been on the rise for the past, I think, three months and it has it's well above the Fed's target. Um job market seems to be rock solid. So when you think about how a Fed looks at the economy, they're they're looking at two sides. They've got price stability, which is inflation, they've got um, you know, full employment, which is you know, the unemployment rate. Unemployment rate has stayed where it's at. Inflation's going up. So the response is usually to have a bias toward, you know, more restrictive policy higher rates. Um, war sort of, he didn't necessarily say that that's what he was going, the direction he was going to move in, uh, because he gave no no sort of indication in one way or the other. But the fact that he came in and sort of said, we're going to follow the data, we're going to uh I'm going to allow the other members of the committee to express their opinions, which showed a bias toward raising interest rates, that shows that there is independence there. Uh so I don't believe he's going to just be a straight vote for Trump's agenda. We saw that um with Stephen Miren, who was on the board uh on a sort of uh you know interim basis, well, not an interim basis, on a short-term basis. Uh he he came in and really advocated for lowering rates uh right off the bat and voted pretty much every time in that direction. So he's not going to be that kind of uh FOMC member. Um, but again, we'll have to sort of wait until we get into an environment where things are a little bit more marginal, where could go one way, could go the other, and see if maybe uh you know some of the views expressed by the the president end up getting reflected in the vote, whatever that may be. But for now, I you know, I don't see a reason to believe that he's not gonna approach the job in an independent fashion. Okay. Wait and see. Yeah, so wait and see. I know it's all it's all wait and see.

SPEAKER_01 19:11

So for people who don't know, who was Alan Greenspan and how would you say his style compares to what we're seeing today with Warsh?

SPEAKER_00 19:21

Yeah, so Alan Greenspan was the uh Federal Reserve chair under uh Reagan, uh the elder Bush uh Clinton, and then into uh uh George W. Bush's uh uh term in office. So he he he was a long-running uh leader of the Federal Reserve, and he's sort of viewed as someone who oversaw a period of um relative prosperity in America. Um his sort of time in office coincided with uh the sort of tech boom and also some of the uh sort of uh after effects of sort of deregulation, both good in the first instance, in which you saw a lot of economic growth in the sort of latter part of the 80s through sort of the you know mid and late 90s. Uh and eventually sort of uh on the downside as well, when when it got when the um you know subprime mortgage crisis happened, a lot of that was sort of the result of things that happened on Greenspan's watch. But you know, Greenspan casts sort of a long shadow over the Fed. Um he's some of you know the goat of central bankers, if you will, for his hand. OG. Well, I would say, you know, OG would probably be Paul Volcker, who was directly before Greenspan, and he was kind of the the heavy hand who uh squashed inflation in the late 70s, early 80s, sort of kind of the ruthless uh inflation hawk. And then um Greenspan came in in the and the period he oversaw was called the great moderation. And it sort of was what you want to have happen. You want the economy to be growing, you want inflation to be stable. I think there's a little bit of an open question about how much of this was his own ability to you know read and react to economic conditions versus good luck versus a sort of adherence to principles of monetary policy, uh, which is to say, you know, sort of, you know, when X happens, you do Y, you know, sort of a paint by numbers approach. I think there was a little bit of all of that, and it kind of creates a sort of um, you know, a mystique around his era of central banking. Now, when he started at the central bank, uh he had some some sort of humorous quips about if you've uh understood what I've said here today, then I must have uh misspoke because the tradition at that point was you know, central bankers don't say anything at all. But he transformed the sort of image of a central banker of being you know someone who occupies a smoke filled room with you know uh sort of numbers to crunch to someone who is, you know, facing the public, who has a persona. He was actually uh friendly with Bill Clinton. I think they played tennis together. So he was a very, very public figure in that in that respect. So, you know, uh some of the things he did, even, you know, he started issuing statements um about about what the policy was. You know, I don't I don't know that that was entirely his idea per se, but the Fed did start doing it under him. And they started this process of of sort of liberalizing communication that was uh picked up on by uh Ben Bernanke. I think it ended up being very useful for him uh during the sort of crisis years. He was able to use, you know, his ability to communicate directly to markets to increase uh comfort and calm, but also to make actual changes in in how people viewed the long-term trajectory for uh interest rates. And then sort of subsequent chairs kind of picked up the ball and carried it more in that open, open communication direction.

SPEAKER_01 22:50

And so he kind of spun a nebulous perspective for the world to look at and interpret what the Fed was going to do. Cohn in your article talks about how Greenspan's gift was always having a story and knowing when the story stopped working. What does that mean? And how does that tactically unveil itself?

SPEAKER_00 23:12

This is an example of describing what is going on in the sort of macro economy, which is a is a pretty difficult thing to do. You know, where you're sort of looking at all the different things going on in the country and and and around the world, even, and trying to uh squeeze them into not only a decision about how to change policy, but sort of a to kind of tell a story. And that may have been one of the kind of critical moments of this was in um the sort of mid-90s when you're having productivity increase. Um, and there was a concern that, you know, the fact that the economy is growing so quickly, it's going to lead to inflation. And like, do you have to sort of step in and shut that down? And, you know, Greenspan was able to, you know, see what was going on and understand it and articulate it. And he made the point that actually, no, listen, uh, if productivity increases alongside this growth in output, you're not gonna see higher prices. And so, like, we're gonna just hold steady and we're gonna let it kind of let it rip. And they did, and you did not have an inflationary moment, and you did have a lot of growth that you know may have been squashed by someone who was a little bit more concerned about inflation in that moment. Uh, so that that's sort of you know telling the story. And then there are moments where things sort of go on a slightly different path. Uh, I mean, there were there were a couple currency crises um in other parts of the world during Greenspan's tenure, uh, Mexico, um, and and in Asia as well. And so uh, I think obviously those are sort of exogenous factors that have to kind of be factored into how the Fed is going to respond to certain things. And and there were moments when you know the Fed did change interest rates in in anticipation of those events. And then another example of him sort of adjusting the story, but towards the end of his his tenure, he was asked about you know his role in setting up for the the subprime mortgage crisis, and and he basically admitted that he made the wrong call. The GFC. Yeah, the GFC, which sort of you know, I say the subprime mortgage crisis because the Fed actually has jurisdiction over you know the mortgage market and uh from a regulatory perspective. And you know, he kind of made the the call at the time to sort of again leave it alone. He was very much a um a non-interventionist type, you know, uh he was uh sort of a follower, an actual friend of um Ayn Rand, um, who was sort of a very, you know, um Austrian libertarian thinker. So he made that call, and I think he acknowledged, again, after the fact that he had not made the right call. And you know, again, that's a that's a communication style that I think is valuable.

SPEAKER_01 25:48

I mean, in hindsight, should they have just majorly clamped down on rates and and made it not so easy to get what do you think Alan Greenspan would have done differently?

SPEAKER_00 26:00

Well, I mean, first of all, there are many things that were wrong with how mortgages were being done at the time. You know, the ninja, the no income, no job application, those sort of things, like very much within the realm of like the Fed to have said, hey, listen, you've got to stop this, or you know, you're gonna have to hold a bunch of capital against those sort of mortgages.

SPEAKER_01 26:19

Okay, so dumb question here, but I'm sure I'm not the only one. Does the Fed have the ability to do that? Can the Fed say, make these changes now? Or do or do they need to kind of do a quid pro quo approach where they say, if you don't do these changes, then we're going to we're gonna change the rate landscape?

SPEAKER_00 26:40

Yeah. So the uh along with uh setting monetary policy, the Fed, you know, they have a they supervise banks, they regulate banks. So they have they have those powers as well. Um, and so uh the the Fed they you know supervise everything. It's a big albatross hanging around his neck. Yeah, yeah, yes, yeah, yeah. They had they had direct direct control. Yes, yeah.

SPEAKER_01 27:01

Okay. Well shoot. So we had a really good run of things working very well, the Reagan era, which I think general sentiments are positive about that time. And then you've got the rise of the internet, and I mean, of course, the dot com boom and crash, but yeah, you know, he presided over pretty pretty good run.

SPEAKER_00 27:19

Yeah, I mean, I I don't think you can really um question the the outcome of that era, you know. I think the long tail of it, um, I you know, I think we're gonna be sort of dissecting that for for a while. And you're gonna have people who are gonna say, look, in some respects unavoidable, you got all this growth because of deregulation and because of this sort of laissez-faire approach. And so, you know, you need to, you know, with one comes the other. Um, and then you're also gonna have people who would say there's a recklessness about it. And um, you know, I I I I I mean, I leave that to the historians to finalize.

SPEAKER_01 27:55

Yeah, that's fair. I wonder if he suspected that, hey, look, this is crazy what's happening right now. Um, and we're giving these guys enough rope to kind of hang themselves to use a dark analogy.

SPEAKER_00 28:08

Yeah.

SPEAKER_01 28:08

Uh I suspect he probably knew that was the dynamic. I'm I wonder if he didn't anticipate the bailout dynamic. I wonder if he thought this would be a culling, uh, but it actually turned into a massive bailout, which, you know, as we know, uh this was interesting to me when I learned this. It actually generated a lot of revenue for the federal government, the TARP bailouts. Yes. Um, but I wonder if that was a piece that just surprised him and was maybe part of his strategy here.

SPEAKER_00 28:38

Uh yeah, I don't I yeah. I think that um we're just guessing here, but yeah, we're all guessing. But I mean, I think I think it was probably foreseeable that there would be some issues from this, but I think the contagion factor exceeded all expectations. And you you have the sort of credit crunch, you have the failure of banks. That obviously caught a lot of people off guard. You know, and you have the sort of these some of these innovative products, um, you know, both the on the securities front and on the insurance front as well, and the sort of the intersection between them. Um, I mean, hindsight is 2020, and now you say you can see that and say, oh yeah, like this is an accident waiting to happen. But at the time, they probably assumed a lower worst case scenario.

SPEAKER_01 29:20

Yeah, fair enough. Last question for you. Let's say that you're at a dive bar with your buddies and sitting on the barstool next to you is Warsh. You've got 30 seconds with them off the record. What what do you want to ask this guy? Yeah, that's a great question.

SPEAKER_00 29:35

Sadly, I would probably ask him for his thoughts on bank regulation, uh, because I know that no one else is gonna ask him about that. Um, but if I were to take off my American banker hat and put on, you know, maybe more of a general news hat, I would ask him to talk me through his views on AI and why he feels the way he does about AI, which is the uh recent past, he's talked a lot about it being a productivity driver, again, like we saw in the 90s, where this can really help uh with inflation, uh, it can help with uh budget deficit. Boom and productivity is sort of cures all ailments uh from a macroeconomy perspective. So I would like to unpack his thinking on that a little bit more and try to understand why he feels so confident that it's going to have the results that he has said they will have over the time horizon that he has said they will have. So I'd like to get his thoughts a little bit more in depth on that and and maybe get them a little more on varnished if possible.

SPEAKER_01 30:37

Okay. Awesome. I mean, hey, that's a that's a very interesting topic. And maybe we'll get him on the podcast and he'll spill the beans for us.

SPEAKER_00 30:44

Yeah, yeah.

SPEAKER_01 30:44

Fingers crossed. Well, hey, thanks so much for being on the show. Uh tell why don't you tell us a little bit about your beat, what people can expect uh to see you produce and where they can follow your work.

SPEAKER_00 30:56

Yeah, so I I cover the Fed for American Banker, uh, I cover bank regulation uh more broadly, and um, you know, I guess increasingly I'm I'm taking a look at uh you know various types of emerging risks in the financial system and the sort of various forms that those take, uh, you know, sort of both related to banks directly and indirectly, you know, and this covers, you know, AI, covers uh, you know, sort of the crypto space. Uh so I'll I'll be very active in uh all those sort of emerging areas. And uh, you know, again, with with a with an angle of of what it means for banks, but I think if if you read my work, you'll hopefully walk away with uh an understanding and appreciation for how how banks sort of shape uh not only the financial system and and sort of the business environment, but also the way we live here in the US. So if that sounds interesting, American Banker uh is where you can find me.