Kevin Warsh has added a new divestment promise to his financial disclosures as part of the process surrounding his nomination to lead the Federal Reserve. In an amended filing dated April 17, Warsh informed the Fed’s ethics officer that he "will divest my interests in iShares S&P/TSX 60 Index (XIU)" if he is confirmed to take over the central bank's top role.
The April 17 amendment updated an original filing submitted on April 10. Warsh, who served previously as a Fed governor and has worked as a financier, said the decision to sell the holding follows advice from agency ethics officials. In his filing he wrote that he would divest because "agency ethics officials have since advised me that the duties of my position will involve particular matters affecting the financial interests of the underlying holding" in the fund.
The iShares S&P/TSX 60 Index (XIU) is a fund that targets Canadian equities. Current Federal Reserve rules place limits on what investments policymakers and their immediate family members can retain, restricting exposure to foreign investments among other prohibitions and controls on how affected central bankers manage their portfolios.
Warsh's broader financial disclosures, released last week, indicate substantial personal wealth and a wide range of investment holdings. In the filings he noted that many of these assets are not fully disclosed in detail and that several will need to be sold should he be confirmed to the Fed's top post.
The timing of any transition to a new chair is uncertain. Warsh is scheduled for a confirmation hearing on Tuesday before the Senate Banking Committee, but his path to confirmation has been clouded by a legal investigation into the Federal Reserve and its current leadership. A number of legislators have said Warsh should not be confirmed until that inquiry is resolved, an obstacle that makes it unlikely he would be ready to assume the role when Jerome Powell's term as Fed chair ends on May 15.
In the same amended disclosure, the Fed's internal ethics officer commented on Warsh's compliance with governing rules, writing, "I continue to believe that Mr. Warsh is in compliance with applicable laws and regulations governing conflicts of interest."
Context and implications
The amendment specifically identifies a foreign-oriented equity fund as a holding Warsh will divest, aligning with existing restrictions on foreign investments for senior Fed officials. The filing reiterates the mechanics of the confirmation process: disclosures and ethics reviews may prompt sales or other actions to remove potential conflicts of interest, while political and legal developments can delay or block a nominee's installation.
Given the items disclosed and the ongoing investigation, the timeline for any change in leadership at the Fed remains uncertain.