WASHINGTON — Herman Cain, President Donald Trump’s planned nominee for the Federal Reserve, withdrew from consideration on Monday, after a lack of Republican support in the Senate doomed his prospects for confirmation.
Trump made the announcement on Twitter, writing, “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!”
Cain would have needed near-unanimous Republican backing in the Senate for confirmation. But four Republicans have said they would not vote for the nominee, effectively killing his chances since Republicans hold 53 seats in the Senate and no Democrats were expected to support him.
Cain had maintained as recently as late last week that he’d continue to vie for the role.
Trump’s plan to pick Cain, a 2012 GOP presidential primary candidate and restaurant industry executive, was immediately controversial when the president announced Cain was his choice earlier this month.
Some lawmakers, economists and Wall Street investors questioned his qualifications for the central bank and noted the multiple allegations of sexual harassment and misconduct that derailed his campaign. Cain has denied the allegations, casting them as old news, but one of the accusers said she would testify at his confirmation hearing if given the chance.
Many also had concerns that the nomination of a close political ally of the president who has raised hundreds of thousands of dollars for Trump and lashed out a Trump’s critics would threaten the bank’s independence.
Cain’s withdrawal is a setback in Trump’s effort to install political allies on the Fed board, part of a broader tug-of-war between the central bank’s leaders and the president over the Fed’s stewardship of the economy.
Trump was irate after the Fed raised interest rates multiple times in 2018, hikes that wound down the central bank’s decade-long effort to boost economic growth and fight unemployment after the Great Recession. The increases were aimed at guarding against future inflation and preserving the Fed’s ability to fight a future downturn, but Trump accused the central bank of unnecessarily constraining growth and triggering the stock market sell-off late last year.
Cain and Stephen Moore, Trump’s other planned pick to fill the remaining seats on the seven-member Fed board and another friend of the president’s, said they support lowering interest rates, a move that would boost growth in the run up to the president’s reelection campaign.
Trump has launched a series of attacks on the Fed, exhorting it to change course in a break with his immediate predecessors, who typically refrained from publicly weighing in on central bank policy to protect the Fed’s credibility.
Fed Chair Jerome Powell has said the bank has no plans to raise rates again this year, citing some uncertainty about the pace of future growth.
The White House never formally nominated Cain and has yet to nominate Moore. Typically nominees undergo an extensive vetting process before the president announces them, but Trump appears to have announced Cain as his planned nominee without fully coordinating with GOP leaders.
That approach appeared to come up short Thursday, when Sen. Kevin Cramer of North Dakota, on Thursday joined three other Republicans — Sens. Mitt Romney of Utah, Lisa Murkowski of Alaska and Cory Gardner of Colorado — in announcing opposition to Cain’s nomination.
“I don’t think Herman Cain would be confirmed by the Senate, and I think the president would be wise to find someone who is less partisan and more experienced in the world of economics,” Romney said Thursday in explaining why he did not support the nominee.
With Cain out, the focus shifts to Moore, who was an adviser on Trump’s campaign and called for Powell to be fired.
Democratic Senator and presidential candidate Elizabeth Warren of Massachusetts sent Moore a scathing letter this month accusing him lacking a good grasp on “basic mathematical and economic concepts.” The letter included nine questions for Moore that attempt to clarify whether he still holds some of his more iconoclastic views.
In a CNN appearance, Moore claimed he had never been in favor of the gold standard, where every dollar is backed by some gold. But the network proceeded to play clips from three different speech where Moore clearly supported the policy, which Cain also endorses.
Moore also called for interest rates to rise in the midst of the financial crisis, a policy that many believe would have caused the country more harm. Moore started calling for a cut in interest rates once Trump took office. Recently, Moore has said there is deflation in the United States, even though government statistics and the White House Council of Economic Advisers all say inflation is rising at about 2 percent a year.
This is not the first time Trump has opted to first publicize a pick and then push the party to go along with it after. Trump named Rear Adm. Ronny Jackson, the presidential physician, to be secretary of Veteran Affairs last year only to watch the nomination fall apart as allegations of misconduct surfaced. His original choice for Labor Secretary, Andrew Puzder, also had to withdrawal after it surfaced that he had an undocumented housekeeper.
Moore has faced similar criticisms about a lack of qualifications and past personal issues, including his failure to pay his ex-wife child support and alimony in 2013. But while Republicans have largely expressed support or at least openness to moving forward with Moore, Cain was a bridge too far for some in the president’s party.
Cain has taken an adversarial stance against some GOP incumbents. The chairman of Cain’s “America Fighting Back PAC” in March sent an email saying 12 GOP senators — including Romney and Murkowski — were “traitors” for voting against Trump’s declaration of a national emergency at the southern border.
Cain said the Senate Banking Committee, which would handle his nomination, was full of “yahoos.”
Cain’s nomination was immediately controversial on multiple fronts. His presidential campaign, which drew notice early in the GOP primary for a “9-9-9″ tax plan, unraveled in 2011 amid multiple accusations of past sexual misconduct and harassment. The National Restaurant Association, Cain’s employer at the time of the accusations, settled sexual harassment claims against Cain with two women.
The Fed board has often had business leaders on its board in addition to Ph.D. economists and Wall Street bankers, but Cain’s views were seen as outside the mainstream.
In the 1990s, Cain served on the Federal Reserve Bank of Kansas City’s board of directors, a group of business and community leaders who advise the head of the Kansas City Fed on how the economy is doing.
But he has supported controversial ideas such as a return to the gold standard system the United States abandoned nearly a half-century ago. The system would have made it almost impossible for the central bank to undertake many of the rescue measures it did during and after the 2008-2009 financial crisis.
“Trump’s other nominees for the Fed were imminently qualified people, but all of a sudden Trump has gone off the rails with Stephen Moore and Herman Cain,” said Robert Brusca, chief economist at consulting firm Fact and Opinion Economics.
A number of Republicans, however, have expressed interest in having a wider variety of views on the Fed board and seem open to taking a close look at Moore, who has been a big proponent of tax cuts.
Ron Paul, a former Republican congressman from Texas and presidential candidate, called Cain and Moore a “basic improvement” over many of the people who have served in the Fed in recent years.
“It’s a good idea to have Cain and Moore at the Fed. They at least have knowledge and respect for a different way of doing things,” said Paul, a libertarian and vocal advocate for a return to the gold standard.
The Fed plays a large role in steering the economy and overseeing banks. The central bank’s leaders — a committee of 12 made up of the Fed governors and five heads of regional Fed banks from across the country — decide whether to raise interest rates to prevent the economy from overheating or lower rates to try to stimulate the economy. At the moment, interest rates are at a level that is considered “neutral,” because it neither spurs growth nor holds it back.
The Fed is tasked with making the best long-term decisions for the economy, steering clear of political calls to make short-term moves that favor certain constituencies.
“We are an organization devoted to public service. We are professional. We make decisions based on facts and evidence and analysis and we stay out of politics,” former Fed chair Janet Yellen said at a forum at the Dallas Fed. “Nothing we do is political.”