Herman Cain will not be nominated as a governor of the Federal Reserve after he asked for his name to be withdrawn from consideration, Donald Trump has announced.
The US president wrote on Twitter that the former pizza chain executive had asked not to be nominated for a seat on the Fed’s board of governors. Mr Trump said he would respect Mr Cain’s wishes, describing him as “a great American who truly loves our Country!”
My friend Herman Cain, a truly wonderful man, has asked me not to nominate him for a seat on the Federal Reserve Board. I will respect his wishes. Herman is a great American who truly loves our Country!
— Donald J. Trump (@realDonaldTrump) April 22, 2019
The candidacy of Mr Cain, one-time contender for the Republican presidential nomination, was already in trouble after a number of Republican senators came out against his selection even before the White House formally nominated him for the post.
Particular questions have been raised about Mr Cain’s background and qualifications, and earlier this month he said in a video on Facebook that a background check would be “more cumbersome” in his case because of an unusual career. Mr Cain ran for the Republican presidential nomination in 2012, but dropped out of the race after allegations of sexual harassment, which he has said were false.
The prospective nominations of Mr Cain and Stephen Moore, a former adviser to Mr Trump’s presidential campaign, have triggered anxiety among economists and some politicians who fret the Fed’s independence is coming under threat. Both men are loyal political backers of Mr Trump who have signalled an appetite for easy monetary policy.
Mr Moore has not been formally nominated by the White House, but he remains in contention for one of the vacant board posts at the Fed. Nominees to the Fed’s board need to be confirmed by the Senate.
Wall Street now wonders if the fallen nomination helps former Trump campaign economic adviser Stephen Moore’s bid for Fed governor.
Irked by the fact that the Jerome Powell-led Fed raised interest rates four times in 2018, Trump said he intends to nominate Moore, the author of “Trumponomics: Inside the America First Plan to Revive Our Economy.”
‘I would vote no’
Spokespeople for Sens. Mitt Romney (R-Utah) and Lisa Murkowski (R-Alaska) confirmed earlier in the month that they oppose Cain for the Fed. A third Republican, North Dakota’s Kevin Cramer, also said he is opposed.
“If I had to today, I would vote no,” Cramer said on April 11.
Reports also listed Colorado’s Cory Gardner as a “no” on Cain.
With a 53-47 majority favoring the GOP in the Senate, four “no” votes effectively sunk Cain’s chances at securing the simple majority needed for confirmation, assuming all the Democrats also voted no.
Sen. Joe Manchin (D-West Virginia), a wild card who has supported GOP nominees in the past, told Yahoo Finance he wants “qualified” candidates and did not think Moore and Cain “rise to that level.”
Cain’s 2012 bid for president collapsed amid sexual harassment claims. Although Cain had experience at the Federal Reserve through his time as a director at the Kansas City Fed’s Omaha branch, critics questioned his economic thinking by resurfacing a 2012 op-ed suggesting that the central bank re-adopt the gold standard.
Sen. Sherrod Brown (D-Ohio), the top ranking Democrat on the Senate Banking Committee said that he’s ready to wind up political opposition to both Cain and Moore.
“Both these nominees are a joke, neither is qualified, neither should serve at the fed,” Brown said.
Trump offered soft support to Cain’s nomination on April 10, telling reporters that the confirmation path ahead is “up to Herman.” Cain had told The Wall Street Journal on April 17 that he would not “quit because of negative criticism.”
Compromise: Confirm Moore?
Ending Cain’s nomination could weigh on Moore’s path to the Fed, raising questions over whether the Cain nomination was a straw man designed to elevate Moore’s chances at confirmation.
Asked about Moore, Romney and Murkowski said on April 11 they are reviewing the nomination.
Although lower profile than Cain, Moore’s economics have also been called into question. He has confused the Volcker Rule for a monetary policy rule on commodity pricing that may have never existed and suggested that the Fed should have raised interest rates to “get less dollars out in the economy” in the midst of the financial crisis.
Moore also has also come under fire for reports that he did not pay $300,000 in alimony related to a divorce and reportedly advocated for banning women from refereeing in men’s college basketball games.
Greg Mankiw, formerly George W. Bush’s head of the Council of Economic Advisers, urged the Senate not to confirm Moore and described him as lacking the “intellectual gravitas for this important job.” Mankiw pointed to the “Trumponomics” book as evidence.
Even Wall Street’s biggest players have concerns. Seven of the large bank CEOs testified on Capitol Hill Wednesday and declined to offer specific thoughts on the Moore and Cain nominations. But they unanimously said they do not support Cain’s gold standard and Moore’s 2008 suggestion to raise interest rates during the financial crisis.
On the other hand, supporters feel Moore would break up the Fed’s consensus-driven style of deciding monetary policy.
Market watchers think Moore’s shot at confirmation look brighter. Raymond James’s Ed Mills wrote Wednesday that Trump’s weak support of Cain is telling.
“If Cain is ultimately not put forward due to lawmakers’ pushback, we view the chances of Stephen Moore being confirmed increasing as a compromise solution,” Mills wrote April 10.
Analysts are downplaying the impact of a theoretical Fed board that includes Moore, noting that his views would be outnumbered by the other five members.
“The Fed is a consensus-driven organization, so two individual governors with views outside the committee mainstream are unlikely to influence policy to any significant degree,” Goldman Sachs’s Jan Hatzius wrote April 8.