Donald Trump recently announced his plan to nominate Republican pundit Stephen Moore to serve on the Federal Reserve Board, and by any fair measure, this was a uniquely ridiculous choice, even by this president’s standards.
There is, however, another vacancy on the Fed board, and Trump apparently has his eye on another nominee who is no better Moore. Axios reported this morning:
President Trump has told confidants he wants Herman Cain on the Federal Reserve board, but will wait until his background check is completed before making the formal announcement, according to two senior administration officials familiar with the decision. […]
Cain served in multiple positions within the Fed system at the Kansas City Federal Reserve between 1989 and 1996. He served as CEO of Godfather’s Pizza and ran for the 2012 GOP president nomination, but dropped out after sexual harassment allegations sank his candidacy.
While Bloomberg News first reported this possibility in January, Axios reports that Trump appears likely to move forward with this nomination. (The reports have not been independently verified by MSNBC or NBC News.)
Which is a shame because Cain, who is not an economist, would be a woefully poor choice for the Fed board.
A quick review of his ill-fated presidential campaign, for example, does not inspire confidence. Remember when he downplayed the value of reading? And his strange Pokemon quotes? And the time he said he didn’t care who “the president of Ubeki-beki-beki-beki-stan-stan” is.
It was during this campaign that Cain also faced multiple allegations of sexual misconduct. The Georgia Republican responded at the time by encouraging people to consider the women in his life whom he didn’t harass.
But that’s really just the start. During Cain’s confirmation hearing, I imagine we’d hear some discussion about the fact that Trump’s purported Fed nominee created a bizarre 9-9-9 tax plan that never really made any sense.
After his failed bid for national office, Cain turned his mailing list into a controversial operation that peddled a series of suspected scams.
In 2016, however, Cain was a Trump supporter – he called the future president a “shucky-ducky kind of candidate” – which in the president’s mind, may very well be the only qualification necessary.
At this point, I imagine White House allies will emphasize the fact that Cain chaired the board of directors at the Fed’s branch in Kansas City, so he’s a less absurd choice than Stephen Moore. Perhaps. But let’s not forget Dave Weigel’s report from 2011 on the important differences between Cain’s former position and serving as a Federal Reserve governor.
There are 12 regional Federal Reserve Banks. Each has a nine-member board of directors, composed of three commercial bankers (Class A, in Fed jargon), three people from nonbanking sectors of the economy (Class B), and three captains of industry from the region (Class C). Cain was Class C. In 1992, he joined the board of directors at the Kansas City branch of the Federal Reserve. In 1994, he was chosen to chair the board.
What does the board of directors actually do? Every month that Cain was there, board members would meet, talk through the economic developments and data in their areas, and offer some advice. Fed economists would listen. The research would be taken up to Kansas City Fed President Tom Hoenig, who could use it however he deigned to use it. “They’re a source of economic information for the bank,” explains Bill Medley, public information director for the Kansas City Fed. What’s their single biggest contribution? They recommend the discount rate, or what the Fed charges for loans. “But that,” says Medley, “has to be approved by the board of governors.”
That means that Cain’s role was chiefly as a charismatic guy who ran meetings well and corralled good advice. He was not an economist.
As Eric Levitz explained a few months ago, “Ultimately, Cain’s experience at the Kansas City fed doesn’t make him a more logical candidate for the Board of Governors, but rather, a more absurd one. Nothing in the businessman’s decades-old experience at that institution should allay anyone’s concerns about the sophistication of his economic thinking.”