Kevin Hassett has withdrawn from consideration to lead the U.S. Fed, narrowing the field in a leadership contest increasingly shaped by political and legal pressure. President Donald Trump has made clear that he prefers Hassett to remain in his current White House role. And this stance has effectively removed him from contention and reshaped expectations around the Fed’s next chair.
In Brief
- •Kevin Hassett withdraws from Fed chair consideration after Trump signals he wants him to remain in the White House, narrowing the field.
- •The Fed chair race tightens to four contenders, with political viability and Senate confirmation risk now outweighing policy alignment.
- •A criminal investigation into Jerome Powell over renovation costs at the Fed adds legal and political pressure to an already tense transition.
- •Senate resistance and legal constraints could delay leadership changes, prolonging uncertainty over Fed governance and rate direction.
Hassett confirmed in a recent television interview that discussions with Trump about the position had been ongoing for months. He described the situation as unresolved, saying no final decision had been made. Trump’s public remarks last week, however, suggested otherwise. At a White House event, the president told Hassett directly that he wanted him to stay in the West Wing.
That message appears to have settled the issue. Hassett later echoed the president’s view, saying several strong candidates remain and acknowledging that Trump may be right to keep him in his current post. He characterized the president’s comments as encouraging and said he felt valued in his role.
With Hassett no longer in the running, attention has shifted to a smaller group of candidates. People familiar with the process say the list has narrowed to four names, with momentum changing rapidly in recent days.
One candidate drawing increased attention is Rick Rieder. Those close to the discussions say his appeal is driven less by ideological alignment and more by political practicality. He is seen as someone who could face fewer obstacles in the Senate at a time when confirmation fights have grown more contentious.
Leadership Risk Rises as Powell Investigation Deepens
Several factors are now shaping the search for the next Fed chair:
- •A reduced pool of viable candidates.
- •Heightened concern about Senate confirmation risks.
- •Greater emphasis on political durability over policy nuance.
- •Increased scrutiny of Fed governance.
- •Legal developments affecting the current leadership.
Pressure on the Federal Reserve has intensified following the opening of a criminal investigation into current chair Jerome Powell. The inquiry focuses on cost overruns related to renovations at the Fed’s Washington headquarters. Although framed as a financial oversight matter, the investigation has taken on broader political significance.
Powell has suggested the probe is connected to longstanding disagreements over interest-rate policy. In a video posted on the Fed’s website, he said the threat of legal action stems from decisions made independently of the president’s preferences. His resistance to calls for lower rates has long strained relations between the central bank and the White House.
The subpoena tied to the investigation was approved by a U.S. attorney and relates to Powell’s testimony before Congress on project costs. While Trump has publicly denied directing the investigation, his past statements reflect persistent frustration with Powell’s leadership.
Fed Power Shift Uncertain as Senate, Courts Enter the Equation
The situation has also complicated Senate dynamics. A senior Republican member of the Senate Banking Committee has warned that any Fed nominee advanced by Trump will now face more aggressive scrutiny. That resistance could delay—or prevent—the installation of a new chair before Powell’s term ends on May 15.
Legal constraints further limit the administration’s options:
- •Fed governors serve 14-year terms under federal law.
- •Removal is permitted only “for cause,” a loosely defined standard.
- •Powell may remain on the board until 2028.
- •The administration is also pursuing the removal of another governor.
- •Court challenges could delay changes to the board’s composition.
One governor targeted for removal has denied allegations of mortgage fraud, calling them baseless. That dispute is expected to play out in court, adding uncertainty to the Fed’s internal balance of power. Three of the seven current governors already favor lower interest rates, aligning with the president’s position. Replacing additional members could further shift the board in that direction.
The search for a new chair is now being led by the Treasury secretary, who previously removed himself from consideration. Although Trump continues to distance himself from the investigation into Powell, his public remarks often suggest impatience. Speaking recently to a business audience, he remarked that Powell would soon be gone.