Federal Reserve Chair nominee Kevin Warsh said to Congress on Tuesday that the central bank does not want to be in the bailout business [1].
This stance signals a potential shift in how the U.S. government handles financial instability, particularly as digital assets and stablecoins integrate further into the global economy. If the Fed refuses to act as a lender of last resort for these entities, it could increase the risk of sudden market collapses without a government safety net.
Warsh made the remarks during a congressional hearing on July 14, 2026 [1], before the U.S. House Committee. He specifically addressed the possibility of the Fed intervening to save failing cryptocurrencies or stablecoin issuers. "We don't want to be in the bailout business," Warsh said [1].
He expanded on this position during the testimony, saying, "We don’t want to be in bailout business, full stop" [2]. The nominee expressed concern regarding the risks posed by stablecoins and referenced the negative implications of past financial bailouts. He said the Fed should avoid being perceived as a provider of such rescues [3].
Despite the strong language, Warsh stopped short of a total guarantee. While he expressed a desire to avoid further rescues, he said that he cannot rule out future intervention [4]. This distinction suggests that while the nominee prefers a strict non-interventionist approach, the Fed may still act if a crisis threatens the broader stability of the U.S. financial system.
The hearing focused on the independence of the Federal Reserve and how the institution manages emerging financial technologies. Warsh's testimony highlights a tension between the desire to eliminate moral hazard—where firms take risks expecting a government rescue—and the necessity of maintaining systemic stability [3, 4].
“"We don't want to be in the bailout business."”
Warsh is attempting to establish a deterrent against excessive risk-taking in the crypto sector by removing the expectation of a federal safety net. However, by refusing to categorically rule out intervention, he maintains the 'Fed Put'—the ability to intervene in extreme scenarios to prevent a total systemic collapse, thereby balancing market discipline with national economic security.
