So... Who Is Running The FED Now?

TL;DR

The Fed faces a leadership vacuum as Powell's chairmanship ends, Worsh's confirmation is stalled, and a turbulent economy demands urgent decisions.

Key Points

• 1.Jerome Powell is resisting leaving despite his chairmanship ending. Powell holds a governor seat until 2028 and, with a now-dropped DOJ investigation over $2.5B headquarters renovations, refused to vacate — blocking nominee Kevin Worsh from taking a seat on the seven-member board.
• 2.Kevin Worsh's Senate confirmation has stalled over three major controversies. He couldn't deny professional ties to Jeffrey Epstein, holds indirect investments in private banks forbidden for Fed chairs, and his family fortune carries dubious connections — all compounding in a hostile Senate committee.
• 3.The Fed's real power lies with governors, not the chairman. The FOMC's 12 voters include seven governors with equal votes; the chairman is merely 'first among equals,' meaning even a friendly chair can be outvoted — undermining the White House's rate-cut strategy.
• 4.The economic environment any new chair inherits is exceptionally hostile. Tariffs are driving supply-side inflation, the Iran war is spiking oil prices, official jobs data is contradictory (178K jobs added while the labor force shrank 396K), and asset markets are near all-time highs while consumer sentiment is near all-time lows.
• 5.AI productivity gains are being used to justify rate cuts but are offset by capital and energy costs. Worsh cited AI deflation as a reason to cut rates, but real savings are going to corporate margins via layoffs, suppressing wages rather than consumer prices.
• 6.The biggest hidden risk is dollar reserve status and long-term bond yields rising despite Fed inaction. The 10-year Treasury yield is already up ~40 basis points since the Iran war began — worth tens of billions in extra interest — meaning rate cuts could paradoxically push long-term rates higher if bond markets lose faith in U.S. institutions.