3 Indian-Origin Experts including Raghuram Rajan tapped to Rescue US Economy as FED Faces Mammoth $6.7 trillion Balance Sheet Crisis

In a major shakeup aimed at modernising American monetary policy, newly appointed U.S. Federal Reserve Chairman Kevin Warsh has tapped three prominent Indian-origin experts—including former Reserve Bank of India (RBI) Governor Raghuram Rajan—to lead independent task forces designed to fix the central bank’s core structural vulnerabilities.

The appointments come as the Fed attempts to dismantle its historically unprecedented, mammoth $6.7 trillion balance sheet and overhaul its economic forecasting toolkits after five straight years of elevated inflation.

The Mammoth Balance Sheet Problem

The most critical challenge facing the central bank is the massive bloat of its asset holdings. Following aggressive pandemic and financial-crisis era emergency interventions—known as Quantitative Easing (QE)—the Fed printed electronic money to buy up trillions in government bonds to keep the financial system from collapsing.

Now, the Fed is attempting to extract that money via Quantitative Tightening (QT), a process that threatens the stability of the U.S. economy in three direct ways:

• Liquidity Crunches: Commercial banks have built their daily operations around holding massive cash reserves. Shrinking the balance sheet too quickly risks a sudden cash shortage, freezing interbank lending and destabilising global markets. The Debt Market Trap: As the Fed stops buying and actively sheds U.S. government debt, Washington must find alternative buyers. To attract them, interest rates on government bonds must remain painfully high, drastically escalating the cost of funding the national debt.
• Loss of Future Firepower: If the Fed cannot successfully shrink its $6.7 trillion toolkit during this period of growth, it will have zero financial buffer left to rescue the U.S. economy when the next recession strikes.

Global Brain Trust Dispatched to Overhaul the Fed

To address these economic threats, Chairman Warsh bypassed standard, insular central banking circles, breaking tradition to form five independent panels co-led by outside experts. The three Indian-origin appointees will spearhead the following core areas:

The independent panels operate outside standard Federal Reserve bureaucracy but maintain full access to the central bank's staff. They are mandated to submit their rigorous policy recommendations to the rate-setting Federal Open Market Committee (FOMC) by the end of the year.