There may be decent reasons for Republican senators to oppose former presidential candidate Herman Cain for a spot on the Federal Reserve board of governors, but a supposed lack of qualifications isn’t one of them. Indeed, Cain’s professional background should make him a welcome addition to the Fed.
Some Republicans may oppose Cain because of allegations against him of extramarital affairs or sexual harassment. This column sets those aside, not as irrelevant to his fitness for appointment, but as not relevant for the narrow issue of professional qualifications. Likewise, when Sen. Mitt Romney, R-Utah, says Cain is too partisan a figure rather than an independent analyst, his point may be valid — but, again, that’s not the issue I’m discussing now.
What’s at issue is whether someone without an economics degree or finance industry experience, such as Cain, has the right background for the Fed. The ordinary answer might be no, but not this time. While chairman and CEO of Godfather’s Pizza, Cain served for many years as a director of the Omaha branch of the Federal Reserve Bank of Kansas City, including a stint as chairman, and then was actually chairman of the main Fed bank in Kansas City. That one sentence encompasses three separate roles.
“Directors” in the Federal Reserve system are local business leaders who provide data and anecdotal judgment that helps Fed policymakers understand what is happening in the “real economy.” They play a valuable role, but not one that in itself would be worthy of appointment to the national Federal Reserve Board.
But to be chairman of a regional branch board is, obviously, a more substantial role. Not just as adviser but an aggregator of advice, the chairman helps set policy for that branch.
Then, to be chairman of one of the 12 regional branches of the Fed is another huge step above. As financial columnist Jim Bianco wrote for Bloomberg Opinion, “Regional Fed banks have large staffs of economists and researchers. The presidents marshal these resources to support independent thought and policy approaches.”
Someone like Cain, who spent years in the overall Fed system, is manifestly well versed in the relevant issues involved.
In short, if confirmed for the Federal Reserve Board, Cain largely would be performing a similar role to what he already performed a quarter century ago. An old Latin saying applies: Discimus agere agendo, meaning, “We learn to do by doing.”
Finally, while it makes sense for most of the seven Fed governors to be economists or bankers, the Fed also could use at least one person with real-world business experience in retail or manufacturing. Especially with nearly a full decade as a Fed system director, Cain will understand how to make sense of the volume of information that filters up through the system.
In sum, if Cain is not confirmed for the Federal Reserve board of governors, President Trump should find somebody else with a similar profile, albeit without the extenuating circumstances mentioned above.
Correction: This column erroneously conflated the job of Kansas City Federal Reserve Bank Chairman of the Board with that of bank president. In his job as chairman, Cain traveled to Washington several times annually to meet with Federal Reserve Board Chairman Alan Greenspan, but did not participate in Open Market Committee meetings – and that committee does not set the federal funds discount rate, but instead conducts open market operations. An earlier version of this article said Cain was a policymaker himself as a voting member of the Federal Open Market Committee.
