Earlier this month, after the Federal Reserve scrapped certain climate-related regulations, Governor Waller's response was succinct. Seen as a leading internal candidate to succeed Powell, he stated in a brief declaration: "Finally got rid of it."

This is precisely the decisiveness that Treasury Secretary Besant, who is overseeing Powell's succession, hopes to see in the next Fed chair. As the Treasury prepares for a second round of interviews in the coming weeks, Besant has sharpened the focus of this prolonged selection process, aiming to create a leaner and more efficient central bank.

Besant’s approach extends beyond abandoning environmental standards and reducing staff—measures Powell has already taken. He wants the Fed to adopt a more hands-off approach in managing the U.S. economy and to rein in the large-scale government bond purchases that have persisted since the 2008 financial crisis.

He also seeks to streamline the Federal Reserve System, which consists of 12 regional banks. Vincent Reinhart, a former Fed official and current chief economist at BNY Mellon Investment Management, noted that Besant’s efforts to address what he calls "mission creep" have "made the market far more receptive to the discussion." This has helped calm investors unnerved by the White House’s push for aggressive rate cuts and personnel dismissals.

On Tuesday, Trump praised Besant and his ability to "tidy everything up," even hinting he might choose him as Fed chair. "He can calm the markets—I can’t," Trump said. "Sometimes I even rattle them."

Other candidates vying for the influential position are following Besant’s lead—at least when it comes to Fed reform.

"What’s striking is that some candidates are openly discussing reforming the Fed’s governance structure and moving toward a smaller, less interventionist central bank," said Aditi Sahasrabuddhe of Brown University. "Besant seems to have shifted the debate from Trump’s calls for lower rates to reforming how the Fed operates."

The Treasury plans to present Trump with a shortlist of candidates between Thanksgiving and Christmas. The Fed’s final rate-setting meeting of the year on December 10 could trigger a "special vote" between two frontrunners—Waller and Vice Chair for Supervision Bowman—for the chairmanship.

Both Trump and Besant believe rates are too high. Internally, Waller and Bowman have advocated for cuts, albeit at a slower pace than the White House desires. Both have aligned with Trump’s economic agenda and agree the central bank should reduce its footprint in financial markets.

According to consulting firm Alvarez & Marsal, Bowman has eased banking regulations, freeing up $2.6 trillion in lending capacity through rule adjustments. While assuring global regulators the Fed would implement the so-called "Basel Endgame" capital rules, he has withdrawn from joint initiatives on climate and other issues.

Waller, however, disagrees with drastically shrinking the Fed’s balance sheet—a move Besant once favored but has recently backed away from. Since 2023, Waller has been known internally for cutting regional Fed resources, centralizing operations in Washington, and eliminating around 350 Fed positions.

Some candidates share Besant’s view that quantitative easing (QE)—the Fed’s crisis-era bond-buying program—should remain a crisis tool rather than a regular policy instrument. Others agree with his belief that the Fed has taken too much spotlight, with measures like QE making markets hyper-sensitive to every word from Fed officials.

Several contenders want fewer speeches, fewer press conferences, and fewer meetings—currently held eight times a year. Former Fed Governor Warsh, now a frequent critic of the central bank, echoes Besant’s concerns, arguing QE has bloated the Fed’s balance sheet and blurred the line between monetary and political leadership.

Warsh appeals to Trump’s desire for a telegenic Fed chair, but his proposal to cut rates while shrinking the balance sheet has baffled economists—a move that would simultaneously tighten and loosen monetary conditions.

BlackRock’s global fixed-income CIO, Rick Rieder—a surprise contender in the first round of interviews—has said little about how he would reform the central bank. But like Besant and other administration officials, he supports aggressive rate cuts while remaining bullish on growth, citing AI-driven stock market gains as a catalyst for strong Q3 performance.

The candidate who has said the least about Fed reform is the one many consider the frontrunner: National Economic Council Director Hassett. Yet, Hassett holds a quality Trump values even more—loyalty.

"I don’t know how much the White House cares about what the Treasury cares about," Reinhart said. "This looks like an organized process, but once it reaches the Oval Office, things could be entirely different."