President Donald Trump reportedly is considering tapping Herman Cain to fill one of the two vacant seats on the Federal Reserve’s board.
Cain, 73, served as a director on the board of the Kansas City Fed from 1992-1996. He eventually rose to become chairman of the board. He had been a board member of the Omaha branch of the Kansas City Fed since 1989.
Fed directors are dedicated representatives of Main Street business, community development, organized labor, and financial services sectors. As a Class C director, Cain’s role was to represent the public–as opposed to the banking sector–on the board. Class C directors cannot be affiliated with the banking industry.
Cain campaigned for the Republican nomination in the 2012 presidential contest. He was best known for his 9-9-9 tax plan which would have replaced the current tax system with flat 9 percent taxes on personal income, a 9 percent corporate income tax, and a 9 percent sales tax.
In 2011, Thomas M. Hoenig, then president and chief executive officer of the Kansas City Fed, praised Cain for his service on the board.
Cain may be best known as the chief executive of the Omaha-based Godfather’s Pizza chain. He was tapped to run that company in 1986 after a successful career as an executive at Burger King. In 1990, he helped lead a leveraged buyout of the chain, which he led until 1996.
He would be a surprising choice to fill one of the vacant Fed seats. President Trump has frequently criticized the Fed for hiking rates and said he “maybe” regrets appointing Jerome Powell to be chairman. National Economic Council director Larry Kudlow has said that the president wants to put people at the Fed “who understand you can have strong economic growth without higher inflation.”
But Cain has in the past advocated for “sound money,” a phrase usually used by inflation hawks. During the Republican debates, Cain was critical of the Fed’s “dual mandate,” the requirement that the central bank pursue a monetary policy aimed at maximum employment and price stability. That too is typically a view taken by those who would aggressively raise rates to fight inflation.
A 2011 Atlantic magazine article quoted a fellow Kansas City Fed board member who described Cain as an inflation hawk.
“Inflation was always the big bugaboo,” the board member said. “And when it comes to monetary policy, he was an inflation hawk. I’ll tell you, that’s the most conservative bunch of guys I’ve ever met.”
And far from bucking the establishment of the Fed, Cain was very supportive.
“His views were pretty consistent with those of the Fed at the time. Alan Greenspan was, of course, chairman and Herman was in lock stop with the policies of the Fed,” the former board member said.