WASHINGTON – U.S. President Donald Trump has named four people for two seats on the Federal Reserve’s board of governors. None of them have made it through the Senate, raising doubts about the president’s central bank acumen and the White House’s vetting process for nominees.
Conservative economic pundit Stephen Moore on Thursday was the latest Fed candidate to flame out, following businessman Herman Cain and economists Nellie Liang and Marvin Goodfriend.
Moore’s exit, following weeks of questions about his qualifications and criticism of his past writings and public remarks, renewed frustrations among Republicans and the president’s own advisers that the White House’s nomination process is light on background research and driven largely by Trump’s whims. Trump, meanwhile, failed in trying to place political loyalists on the Fed’s board and may be forced to consider more conventional candidates.
Moore’s withdrawal followed a familiar pattern. The president tweeted that the candidate himself made the decision, just hours after Moore insisted to a roomful of journalists that he was “all in” and that he would only withdraw if Trump decided to “throw in the towel.”
A similar fate befell Cain, the former Godfather’s Pizza Inc. chief executive and Republican presidential candidate, earlier this month. Liang and Goodfriend were at least formally nominated for the Fed board last year. Goodfriend wasn’t renominated this year and Liang withdrew in the face of tepid enthusiasm for them among Senate Republicans and Trump himself.
“They came to the right decision,” Sen. John Thune, the No. 2 Senate Republican, said of the withdrawal of Moore and Cain. Thune had publicly questioned whether Moore could win confirmation, and suggested the White House consult with Majority Leader Mitch McConnell in advance of floating further names “particularly for big positions like this.”
Trump has succeeded in filling three posts on the Fed board and managed to elevate Jerome Powell, already a governor, to the chairmanship — though the president rapidly soured on him following the central bank’s 2018 interest rate increases. The president also won Senate confirmation of Fed Vice Chairman Richard Clarida and the Fed’s vice chairman for supervision, Randal Quarles.
All were considered conventional, noncontroversial choices.
Ian Katz, an analyst at Capital Alpha Partners LLC, a Washington policy research firm, said he expected the White House to return to similar candidates.
“I do think they go back a little more toward the technocrats,” he said. “But, more importantly, they consult with GOP senators to make sure that they are not putting them in an awkward position. And they vet them.”
The White House didn’t immediately name new choices for the Fed to replace Moore and Cain. Possibilities include Judy Shelton, a conservative economist, and Craig Phillips, a counselor to Treasury Secretary Steven Mnuchin. Both of them are interested in the Fed posts, according to people familiar with the matter.
But Shelton and Phillips bring baggage of their own. Shelton has long advocated for a return to the gold standard, an idea many mainstream economists consider unwise. Phillips, a former BlackRock Inc. executive, was a fundraiser for former Secretary of State Hillary Clinton’s presidential campaign and was designated a “Hillblazer” for his fundraising efforts.
Trump has long resisted the conventional approach to governing and appears impatient with the traditional White House vetting that normally precedes nominations. Cain and Moore were political loyalists — Moore was an adviser to Trump’s campaign, while Cain set up a superpolitical action committee last summer to support the president — and cable television veterans whose nominations were announced by tweet and never formally submitted to the Senate.
People familiar with the selection process for Cain and Moore have said there was no internal process to choose nominees. Trump, rather, simply chose among candidates proposed by close advisers.
In Moore’s case, news of his candidacy broke before he even had fully discussed the position with his wife. Nobody from the administration was appointed as a “sherpa” for his candidacy on Capitol Hill or to provide communications advice to Moore, who spoke regularly to journalists on the record and without White House minders.
By the time a private public relations firm started promoting Moore to rally allies, his candidacy had been fatally damaged by the resurfacing of past comments that were racially insensitive or disparaging toward women.
“All presidents have had the occasion to put partisans on the Board of Governors, but they were all unabashedly qualified,” said Mark Spindel, chief investment officer at Potomac River Capital in Washington.
The White House’s consideration of Federal Reserve candidates has also been hampered by Trump’s ongoing frustration with Mnuchin’s recommendation of Powell.
Trump has openly grumbled that interest rate increases under Powell’s leadership have kept the economy from performing better during his presidency. As a result, the secretary — who would normally take a lead role in preparing Federal Reserve nominees — has been sidelined during the selection process, according to people familiar with the matter. Mnuchin said in April, before Cain withdrew, that he had never met the candidate. Trump’s top economic adviser, Larry Kudlow, has instead taken a larger role.
Cain and Moore weren’t the first examples of Trump pushing forward a nominee because of personal affinity before White House advisers had a chance to vet their backgrounds for potential landmines.
Trump chose his personal physician, Ronny Jackson, to lead the Department of Veterans Affairs, only to see allegations of workplace mismanagement surface. Andrew Puzder, the would-be secretary of labor, was pulled after his employment of an undocumented housekeeper was revealed. Former State Department spokeswoman Heather Nauert’s bid to become ambassador to the United Nations was withdrawn after she acknowledged hiring a nanny who lacked a proper work visa.
Dozens of other lower-level candidates across the administration withdrew from appointments after damaging information came to light.
Trump’s impatience and impulsiveness aren’t the only reason nominees have faltered under scrutiny. The White House’s Presidential Personnel Office, which vets new appointees, is staffed at levels far below previous administrations, according to a report by the Washington Post.
That has prompted even some of the president’s closest allies to call on the president to wait before floating further would-be nominees for important government posts.
“I think it’s probably better to do a little more in-depth understanding of whether somebody can be confirmed or not before you say who you’re thinking about nominating,” said Republican Sen. Roy Blunt of Missouri.
Republican Sen. Lisa Murkowski of Alaska, who said she had an opportunity to privately convey her concerns about Moore to the administration, said the lesson for Trump was “vetting.” There are plenty of qualified candidates for the Fed, she said.
Whoever is picked next, Republican lawmakers said they hope the White House works diligently to keep the person from becoming the fifth straight Fed nominee to fail.
“I think it’s pretty obvious that a little collaboration up front goes a long way,” said Sen. John Cornyn of Texas.