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Trump Fed choice Cain could face hurdles

TOO POLITICAL?Herman Cain is an associate of Donald Trump, but the US Federal Reserve is supposed to remain free of political taint to maintain the trust of markets

AP, WASHINGTON

US President Donald Trump on Thursday said that he intends to nominate Herman Cain, a conservative political ally and former US presidential candidate, for a seat on the US Federal Reserve board.

“I’ve told my folks that’s the man,” Trump told reporters in the Oval Office, adding that Cain is undergoing background checks before a nomination.

“He’s a very terrific man, a terrific person,” Trump said. “He’s a friend of mine.”

The choice of Cain would mark the second nomination to elevate a Trump ally with deep roots in conservative politics to the Fed’s main policymaking body, a panel that the president has sharply criticized as insufficiently committed to low interest rates.

Trump two weeks ago said that he planned to nominate Stephen Moore for a separate vacancy on the board.

Moore’s nomination has ignited criticism that he is unqualified and too politically minded to serve on the board of the world’s most influential central bank.

By design, the Fed is supposed to remain free of political taint to maintain the trust of financial markets and global policymakers.

Former Godfather’s Pizza chief executive Cain ran for the 2012 Republican presidential nomination, but dropped out after allegations of sexual harassment.

The selections of Cain and Moore would require US Senate confirmation and their potential nominations could face hurdles.

US Senator John Thune, the Republican whip, said lawmakers would want to question both men.

“They all have to go through the process and see whether or not they’re a good fit — both in terms of qualifications, and just the experience and everything else,” Thune said. “You want somebody on the Fed to be somebody who’s very knowledgeable on economic issues.”

The seven-member Fed board, along with the presidents of the Fed’s regional banks, plays a critical role in the US economy, holding meetings to debate and vote on interest rates that affect everything from currency values, mortgage rates, savings accounts to the health of the economy.

Cain, who formerly served on the board of the Fed’s Kansas City regional bank, has also criticized the central bank’s policies.

In a 2012 Wall Street Journal column, Cain argued that the Fed’s policies had manipulated the value of the US dollar.

In the article, he advocated a return to the gold standard as a way to control inflation — a position taken by some other Fed critics, but which most economists call unworkable.

In September last year, Cain cofounded a pro-Trump super political action committee, America Fighting Back PAC.

It features a photograph of the president on its Web site and says: “We must protect Donald Trump and his agenda from impeachment.”

Trump’s other nominees have held views more in line with traditional selections for the Fed board.

The White House on Thursday announced that Trump was nominating Michelle Bowman, a Kansas banking regulator, for a full 14-year term on the Fed.

She joined the Fed last year, taking over a term that is to end next year.

In a tweet on Thursday, Trump said the economy was looking very strong, “despite the unnecessary and destructive actions taken by the Fed.”

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