Kevin Warsh, President Donald Trump’s pick to lead the Federal Reserve, has promised a “regime change” at the central bank, a goal that could include overhauling or cutting staffing.
Warsh, 55, has been nominated to replace outgoing Fed Chairman Jerome Powell after Powell’s term ends in May. There has been much speculation about how Warsh will conduct monetary policy and shrink the Fed’s balance sheet. Less noted, though, is that he has signaled he would implement personnel changes at the central bank as well.
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It’s unclear if Warsh intends to conduct major staffing cuts at the Fed headquarters should he be confirmed, but he has indicated in interviews that there is “deadwood” at the independent agency and that change will involve “breaking some heads.”
Some Fed critics have argued that the Fed is bloated and spends too much. A number of free-market conservatives and Republicans also contend that the Fed board is biased toward Democrats and tends to support greater government intervention in the markets.
Stephen Moore, a chairman and co-founder of the group Unleash Prosperity and a former adviser to Trump, supports free markets and the repeal of regulations, telling the Washington Examiner that he would like to see personnel cuts from Warsh.
“They’re all Keynesians,” Moore said, using a term that refers to adherents of the economic theories promoted by the British economist John Maynard Keynes. “They’re the people who gave us 9% of inflation. So get rid of them. You know, just downsize the Fed. You don’t need 3,000 economists and advisors over there.”
According to its most recent numbers, the Fed has just under 3,200 employees at the Board of Governors in Washington, D.C., and over 20,000 at its regional banks across the country.
Larry Kudlow spoke with Warsh about the staff during an interview last year. He pointed out that Fed staff donate overwhelmingly more to Democrats than Republicans. In 2024, staff donations to Democrats made up 92% of total staff donations. Kudlow said that personnel “matters a lot.”
Warsh responded by saying that the “good news” is that in his experience, there is “still a huge amount of talent” at the Fed.
“But there’s also plenty of deadwood,” Warsh added. “There are also people that need to adjust their thinking to a modern economy.”
During an interview on Fox Business in July, Warsh said that the Fed has “lost its way” and that there needs to be “regime change.”
“That’s not just about the chairman — it’s about a whole range of people, it’s about changing their mindset and their models, and frankly it’s about breaking some heads,” Warsh said. “Because the way they’ve been doing business is not working.”
And if he is confirmed as the next Fed chairman, Warsh would be able to go in and start implementing staff changes, according to Aaron Klein, a senior fellow in Economic Studies at the Brookings Institution.
“As chair of the board, he has significant authority among staff, not just about the size of the operation, but also about who is in charge — the staff report to the chair, so he has a lot of authority,” Klein told the Washington Examiner.
Still, Klein said that there is a long history of outsiders who have called for smaller government, but then, once in charge, find that much of the staff is essential.
“Could he slash the staff of the Fed? Yes. Is he likely to? History says no. Could he change senior officials? Absolutely,” Klein said.
Klein said it would also be more challenging to reshuffle staff at the Fed’s regional banks, which are run by Fed presidents across the country. Changes at the Fed’s headquarters in Washington would be more likely.
“A big reshuffle of the board is far more likely than changes of the regional banks that are not part of the U.S. government,” he added.
It is worth noting that under Powell, the Fed did reduce staff. In a May 2025 memo, Powell said the central bank was looking to reduce its staff by 10% over the next couple of years.
“Experience here and elsewhere shows that it is healthy for any organization to periodically take a fresh look at its staffing and resources,” Powell said. “The Fed has done that from time to time as our work, priorities, or external environment have changed.”
Judy Shelton, who was a nominee to the Fed board during Trump’s first term and was seen as a long-shot candidate to fill Powell’s seat this time around, said that she thinks the issue at the Fed isn’t necessarily a pure numbers game, but rather that staffers have too much power and sway over leadership.
“If you look at the transcripts and the minutes from the meetings, my sense is that the staff just choreographs it too much — the staff really runs the place, in my view,” she told the Washington Examiner. “My issue would be that staff leads the FOMC around by the nose.”
Still, Doug Holtz-Eakin, the director of the center-right think tank American Action Forum, said that while Warsh would have broad authority over staff changes, he hasn’t heard the Fed chairman nominee speak about deep cuts to staff.
“I’ve never heard Kevin mention that once as something that he thought was necessary, something he was thinking about doing, that would be news to me,” Holtz-Eakin, who is also the former director of the Congressional Budget Office, told the Washington Examiner.
Outside of the Fed, staffing cuts across the federal government were a major goal of the White House since the start of Trump 2.0.
Russ Vought, director of the Office of Management and Budget, has been a major proponent of downsizing the federal bureaucracy and cutting staff at various agencies. He has led the charge to reduce staff at other agencies, although the Fed has a unique independence that insulates it from White House-directed cuts.
However, he did weigh in on concerns that the Fed headquarters building renovation was running over budget last year and accused Powell of having “grossly mismanaged” the central bank.
“Now up to $2.5 billion, roughly $700 million over its initial cost,” Vought said on social media. “These renovations include terrace rooftop gardens, water features, VIP elevators, and premium marble. The cost per square foot is $1,923 — double the cost for renovating an ordinary historic federal building. The Palace of Versailles would have cost $3 billion in today’s dollars!”
Likewise, National Economic Council Director Kevin Hassett, who was long considered a front-runner for the Fed chairman nomination, has said the Fed could use some downsizing.
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“Are they doing a good job at forecasting how the economy’s gonna be over the next 12 months?” Hassett said on Fox Business in December. “Do they have a lot of people dedicated to that? And are they doing a good job or not? You know, if there are people that are just fantastic at nailing the economy, and it took 400 of them, then maybe you keep 400.”
“Any new Fed chair is gonna have to investigate and think about who’s doing a good job and who’s not doing a good job,” he added.