Title: The Intersection of Monetary Policy and International Trade: Analyzing the Conflict of Interest in Kevin Warsh’s Dual Roles
Abstract
This paper examines the implications of Kevin Warsh’s simultaneous roles as a Federal Reserve (Fed) appointee and a board member of Coupang, an e-commerce company central to U.S.-South Korea trade tensions. It evaluates the legal, ethical, and policy ramifications of this conflict, focusing on Fed independence, international trade dynamics, and public trust in central banking. The analysis highlights the potential for conflicts of interest when regulatory or policy decisions intersect with commercial board memberships, particularly in politically charged contexts.
- Introduction
The U.S.-South Korea trade relationship has become increasingly contentious in recent years, with escalating tariffs and regulatory disputes over corporate practices. At the heart of this spat lies Coupang, a South Korean e-commerce giant under scrutiny for a data breach, which has drawn criticism from both domestic regulators and U.S. investors. Concurrently, Kevin Warsh, a former Federal Reserve governor and current Stanford professor, has served on Coupang’s board since 2019, earning over $1 million in compensation. This paper explores the implications of Warsh’s dual role, given his recent appointment to the Fed by U.S. President Donald Trump. The case raises critical questions about the governance of the Federal Reserve, the intersection of trade policy and monetary authority, and the ethical obligations of public officials.
- Kevin Warsh’s Background and the Federal Reserve’s Regulatory Framework
Kevin Warsh, a prominent economist, served as a Fed governor from 2006 to 2011 under Presidents George W. Bush and Barack Obama. Known for his advocacy of inflation targeting, Warsh later joined Coupang’s board in 2019, earning approximately $325,000 annually by 2022. His reappointment to the Fed by President Trump in 2026 has sparked controversy, as the Federal Reserve Act of 1913 explicitly prohibits members of the Board of Governors from engaging in other employment, requiring them to “devote their entire time to the business of the Board” (Federal Reserve Act, Section 3b).
Post-2008 financial crisis reforms further strengthened internal rules, banning Fed officials from holding stocks, derivatives, or bonds, and restricting external board positions. New members have six months to divest existing assets post-appointment. While Warsh is a former Fed member, his 2026 appointment under Trump places him under these regulations, requiring full divestment of Coupang shares and board duties. However, the White House and the Fed have yet to clarify whether such compliance is mandated, creating ambiguity about the legitimacy of his appointment.
- Coupang and U.S.-South Korea Trade Tensions
Coupang, Korea’s largest online retailer, has faced a major data breach affecting millions of users. South Korean regulators opened an investigation in 2025, citing potential violations of data privacy laws. However, some U.S. investors, including Trump administration allies, labeled the probe discriminatory against an American-owned company, arguing it hindered Coupang’s market access in the U.S. This dispute escalated in early 2026 when the U.S. increased tariffs on South Korean automobiles from 15% to 25%, citing unmet trade deal obligations.
Vice President JD Vance and South Korean Prime Minister Kim Min-seok discussed the issue in early 2026, but tensions persisted as Seoul delegation failed to resolve discrepancies in trade negotiations. Coupang’s U.S. headquarters in Seattle and its Silicon Valley investor base have made it a symbolic figure in cross-border regulatory conflicts.
- Implications of Warsh’s Board Membership
Warsh’s position on Coupang’s board creates a direct conflict of interest with his role at the Fed. While the Fed primarily focuses on monetary policy, it interacts with the Trump administration on macroeconomic and trade issues. For instance:
Trade Policy Influence: The Fed’s stance on interest rates affects import costs and currency valuations, indirectly influencing trade negotiations.
Regulatory Advocacy: If the Fed urged regulatory leniency toward Coupang to protect U.S. economic interests, Warsh’s financial ties could compromise impartiality.
This duality undermines the Fed’s political independence, a cornerstone of its credibility. Historical precedents, such as the 2008 crisis, highlight the risks of personal or corporate interests influencing central banking decisions.
- Legal and Ethical Considerations
The Federal Reserve Act’s strict employment restrictions are designed to prevent external loyalties from swaying policy decisions. Warsh’s continued involvement with Coupang violates Section 3b, necessitating immediate divestment under the Fed’s new compliance framework. Ethically, his financial stake in a company at the center of a trade dispute poses a public perception problem, eroding trust in the Fed’s neutrality.
Former Fed chairs, such as Alan Greenspan and Ben Bernanke, faced scrutiny for post-Fed board memberships but were required to step down from active roles. Warsh’s case is unique due to his simultaneous Fed appointment and corporate board tenure, a scenario not adequately addressed by existing statutes.
- Broader Implications for U.S.-South Korea Relations
The Warsh-Coupang controversy exacerbates existing U.S.-South Korea trade tensions by entangling corporate governance with geopolitical strategy. South Korea may perceive the Tariff increase as retaliation for the Coupang investigation, while the U.S. risks damaging economic ties by appearing to prioritize corporate interests over diplomatic stability. This case underscores how personal and corporate ties of U.S. officials can indirectly shape trade policy, complicating international negotiations.
- Case Studies and Comparative Analysis
2008 Global Financial Crisis: The Fed’s bailouts of financial institutions were scrutinized for conflicts of interest between regulators and the institutions they oversaw.
JPMorgan Chase and Daniel Tarullo: Tarullo, a former Fed governor, faced ethical concerns for his ties to banks under regulatory review.
European Central Bank (ECB) Independence: ECB officials are barred from external appointments, reinforcing institutional credibility.
These examples highlight the need for stricter oversight of Fed appointments to prevent conflicts in politically sensitive sectors like trade.
- Conclusion and Recommendations
The Warsh-Coupang case exemplifies the risks of conflating central banking roles with corporate board memberships, particularly in politically charged environments. To preserve the Fed’s independence and public trust, the following measures are recommended:
Strengthen Conflict-of-Interest Laws: Enact legislation requiring full divestment of corporate assets prior to Fed appointments.
Public Disclosure and Oversight: Mandate real-time financial disclosures for Fed members and their families.
International Dialogue: Encourage bilateral forums to address corporate regulatory disputes without political interference.
As U.S.-South Korea trade tensions evolve, this case serves as a cautionary tale about the intersection of economics, ethics, and governance.
References
Federal Reserve Act, Section 3b.
U.S.-South Korea Free Trade Agreement (2012).
Coupang Annual Reports (2019–2025).
Warsh, K. (2019–2022). Coupang and Federal Reserve Board Compensation Records.
Greenspan, A. (2008). The Age of Turbulence.