The Senate Banking Committee on Wednesday morning voted Kevin Warsh out of committee on a 13-11 line, clearing him for a floor vote and confirmation as Federal Reserve chair. [1] On the same broadcast, Chair Jerome Powell held what may be his last FOMC press conference and signaled he is considering staying on as a Fed governor after the May 15 chair handover, a move that would leave him a sitting board vote on rate decisions.

The paper said on Sunday that Tillis clearing Warsh converts the Powell probe into Fed succession. Wednesday's tally completes that conversion at the committee level, and Powell's tenure-lengthening signal is the second half of the same fact: regime change at the chair, continuity at the board. The Fed structure no committee planned for is the structure the Fed will have. [2]

A Powell governorship is constitutionally available — chairs are appointed for four years, governors for fourteen — but it has been politically unusual for a former chair to stay on the board. The most recent precedent is Marriner Eccles in 1948. The decision, if Powell makes it, would put a residual independent vote on every rate decision Warsh chairs through 2028. [3]

The market consequence is immediate. A Powell-on-the-board scenario was not in any sell-side rate model published before today; the prospect of two Warsh dissents from a single voting bloc changes the median-FOMC math. Wednesday's pause at 3.50–3.75% is the last decision Powell makes as chair. The next is the first one he might make as a governor.

-- SAMUEL CRANE, Washington