Svmuu News: Kevin Warsh’s plan to shrink the Federal Reserve balance sheet will proceed only slowly. As the Donald Trump nominee for Federal Reserve chairman, Warsh is facing resistance to his proposal to reduce one of the Federal Reserve most influential tools.Warsh has repeatedly stated that the Federal Reserve’s nearly $7 trillion balance sheet reflects an overreach into the purview of Congress, noting that the massive bond purchases under successive quantitative easing programs have distorted financial markets.However, sources familiar with the matter revealed that Wash will not begin adjusting the Federal Reserve balance sheet until after extensive consultations with banks and the broader public regarding the potential impacts.These sources also stated that he is unlikely to push the balance sheet back to pre-2008 financial crisis levels and will call for internal studies and academic conferences to explore the issues before taking action.Warsh also believes that the 2008 crisis demonstrated that overreliance on the interbank market poses a risk to financial stability, and has publicly advocated for a “third model” of balance sheet management. Some regional Fed presidents are willing to consider a gradual shift toward a new balance sheet management model. (Financial Times)