Fed: Warsh Reshapes

The presidency of the Federal Reserve Bank of Atlanta has been open since February when its occupant's term expired.

That seat is the one immediate opportunity for new Chairman Kevin Warsh to reshape the Fed.

The Washington-based Board of Governors has a say in the pick for Atlanta.

That selection process was reset when Warsh became chairman, two people familiar with the search told CNBC.

The Fed considered Michael Faulkender, former deputy Treasury secretary, for the Atlanta job, though his current status for the position couldn't be determined.

The selection process is ongoing.

The search for a new president of the Federal Reserve Bank of Atlanta — now entering its seventh month — is being watched carefully for how new Fed Chairman Kevin Warsh intends to reshape the interest rate-setting Federal Open Market Committee.

That process has shifted as Warsh has begun to put his stamp on the central bank .

The Fed was considering candidates for Atlanta under then-Chair Jerome Powell , but the selection process was paused in part to allow Warsh to oversee the appointment, two people familiar with the hiring process told CNBC, speaking on condition of anonymity to discuss the ongoing search.

Michael Faulkender , a former senior Treasury official under President Donald Trump , was subsequently considered for the position in Atlanta, the people said.

It isn't clear if Faulkender is still a candidate.

The Atlanta Fed declined to comment on Faulkender or who is under consideration. "Our committee is conducting a thorough and deliberate search for the next president of the Federal Reserve Bank of Atlanta.

We maintain our focus on selecting the best candidate to serve the Sixth District, while protecting the integrity of the process," Greg Haile, chair of the Atlanta Fed board of directors and presidential search committee, said in an emailed statement. "We will provide relevant updates about this important leadership role when appropriate." The Fed and Faulkender declined to comment.

Sens.

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But he inherits a Fed whose membership was shaped by Powell and the chairs before him.

Warsh has few immediate opportunities beyond the Atlanta job to bring allies onto the FOMC.

He recently announced five task forces to study what he wants to change.

Those will be staffed by outside experts.

No current Fed governors or presidents will be included on those task forces.

Warsh comes in facing questions about how independent he'll be from Trump.

But Warsh didn't acquiesce at his first FOMC meeting last week to Trump's demands for rapid rate cuts.

Instead Warsh defied many analysts' expectations with a hawkish news conference that prompted markets to raise their projections for interest rates.

Warsh could use the Atlanta appointment to further defy expectations and assert his independence from the administration.

The 12 regional Fed presidents are chosen through a back-and-forth process between the directors of the bank and the Board of Governors in Washington.

That arrangement is the result of the Federal Reserve Act's effort to balance the power of the board in Washington and the influential New York Fed with additional regional representation.

Typically, the local bank's directors hire a search firm and come up with a list of candidates.

After feedback from Washington, the directors then choose a president who is acceptable to the board and the chairman.

The process can involve input from the board and from congressional representatives and advocacy groups.

Bank directors often have their own agendas.

For example, the Kansas City Fed has elected a string of hawkish candidates going back decades.

They have racked up the most dissenting votes on the FOMC against easing interest rates.

The Atlanta Fed's position has been open since February, when Raphael Bostic stepped down at the end of his term.

He had announced his departure in November.

He became the first African American to head a district bank in 2017 under pressure from Congress and outside interest groups for the Fed to diversify the ranks of its leadership.

Executive search firm Heidrick & Struggles is overseeing the current search.