WASHINGTON — President-elect Donald Trump’s transition team is considering pairing Kevin Warsh, a former Federal Reserve official, in the Treasury secretary role, with hedge fund manager Scott Bessent as director of the White House’s National Economic Council, according to people familiar with the matter.

Bessent was offered the NEC post but told Trump that he wouldn’t accept until he knew who the Treasury secretary would be, the people said. Warsh has been invited to Trump’s Mar-a-Lago club, where transition efforts are based, to interview with the president-elect in coming days, they said.

Both Warsh, 54, and Bessent, 62, are seen as having the Wall Street pedigree that Trump has been seeking to lead his economic team, and each has the support of many advisers close to the president-elect.

Still, concerns remain over whether Warsh is loyal enough to Trump’s “America First” protectionist economic agenda. In a 2011 op-ed co-authored with Jeb Bush, Warsh said policymakers must “resist the rising tide of economic protectionism.”

Warsh was a top contender for a nomination to become chair of the Federal Reserve during Trump’s first term, but then-Treasury Secretary Steven Mnuchin persuaded Trump to instead choose Jerome Powell for the job. Trump has publicly expressed regret over that pick.

Wide field

Trump was expected to make a decision on the Treasury job last week, followed by other parts of his economic team including NEC, Commerce secretary and U.S. trade adviser. But infighting over Treasury between Bessent and Howard Lutnick, CEO of Cantor Fitzgerald LP, irritated the incoming president and delayed his decision, people have said.

Lutnick is no longer seen as in contention for Treasury, according to people familiar with the decisions. A representative for Lutnick did not respond to a request to comment.

Bessent remains in the running for the Treasury job. He declined to comment.

Apollo Global Management Inc. CEO Marc Rowan is also under consideration for the Treasury job, according to people familiar with the matter. They said it could be difficult for Rowan to disentangle himself from Apollo, which would be required if he were to serve in the cabinet.

Kevin Hassett, who served in Trump’s first-term White House, is also in the mix to lead NEC, the people said. Trump’s transition team did not reply to a request for comment.

Warsh, who also did not respond to a request to comment, has spent time with the transition team since Election Day, advising on economic policy and personnel decisions, people said. He married into the Lauder family, known for the eponymous Estée Lauder cosmetics empire.

Crucially, the Treasury drama has impeded Trump’s ability to quickly tap someone for a job that is the most powerful in global economics and finance after voters sent him back to the White House to fulfill his broad economic agenda.

Investors on ‘edge’

The protracted decision-making and infighting during the Treasury secretary selection process has intensified anxiety among market participants over the incoming administration’s ability to carry out economic policymaking.

“Investors are on edge regarding the Trump’s Treasury Secretary pick and what it might signal about the balance of power within the administration on economic policy, the mix of market-friendly vs. -unfriendly policies, and how less market-friendly trade and immigration policies plus deficits will be calibrated to mitigate adverse impacts,” Evercore ISI’s Krishna Guha wrote with his colleagues in a client note on Monday.

The Treasury post, fifth in the presidential line of succession, is closely connected to global financial markets. The job oversees the $28 trillion Treasuries market, nearly 40 economic sanctions programs and currency policy.

‘Not an outlier’

David Wessel, the director of the Hutchins Center on Fiscal and Monetary Policy at Brookings, said Warsh is experienced in dealing with the Fed and Wall Street during a crisis. He added that investors would see a Warsh nomination as a sign of stability and view him as someone who would push back against some of the most extreme tariff scenarios Trump has discussed.

“This is a guy who worked for George W. Bush in the White House — he’s not an outlier like a Matt Gaetz or Robert F. Kennedy, Jr.,” Wessel said, referring to two of Trump’s most controversial cabinet picks.

Bessent has also garnered admiration on Wall Street, including from JPMorgan Chase & Co.’s Jamie Dimon, according to someone familiar with Dimon’s thinking.

Fed critic

Warsh has been a frequent Fed critic in the years since he left the Board of Governors, arguing that the central bank opened itself up to scrutiny by intervening too much and for too long to stimulate the economy after the 2007-08 recession.

More recently, he’s said the Fed doesn’t have a coherent theory of inflation, and argued the decision to cut interest rates by a half-point in September amounted to policymakers declaring victory over price pressures prematurely.

“If there was a single lesson they should have learned from the last four or five years is they should be suspect of their own convictions and their own forecasts,” Warsh said in a Sept. 20 interview on Fox Business. “And yet now they’re acting without the kind of humility they should.”

Sean Simko, global head of fixed-income portfolio management at SEI Investments Co., said that the Treasury chief will factor into people’s views about inflation. While noting that the Fed is ultimately responsible for keeping inflation under control, Simko said that it’s the Treasury chief who helps steer trade policy and budget management.

The economic and fiscal landscape of the country has shifted since Trump was last in office. Since January 2021, a cost-of-living crisis has rippled across the U.S., one of the key reasons polls show that voters supported Trump. And then there’s the nation’s debt pile, which has soared to roughly $28 trillion from $22 trillion when Trump left office in early 2021.

“The level of debt and the deficit on the budget side and Treasury issuance is just a completely different planet relative to eight years ago,” said Mark Spindel, chief investment officer at Potomac River Capital.

“The Treasury secretary has a disproportionate responsibility for how you govern and manage the national debt,” Spindel said, from “what kinds of bond you issue and what tenors of bond you issue. The markets are very ‘curious’ who will be in this position.”

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(With assistance from Viktoria Dendrinou, Liz Capo McCormick, Laura Benitez and Kate Davidson.)

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