There may be decent reasons for Republican senators to oppose former presidential candidate Herman Cain for a place on the Federal Reserve Board of Governors, but an alleged lack of qualifications is not one of them. In fact, Cain's professional background should make him a welcome addition to the Fed.
Some Republicans may oppose Cain because of allegations of extramarital affairs or sexual harassment. This column sets them aside, not so irrelevant to his suitability for appointment, but not relevant to the narrow issue of professional qualifications. Similarly, when Sen. Mitt Romney, R-Utah, says Cain is too biased a figure instead of an independent analyst, his points may be valid ̵
What happens the problem is whether anyone without the finance or finance experience, like Cain, has the right background for the Fed. The usual answer can be no, but not this time. While the chairman and CEO of Godfather's Pizza, Cain served for many years as director of the Omaha Department of the Federal Reserve Bank of Kansas City, including a stint as chairman, and was actually the leader of the largest Fed bank in Kansas City. One sentence includes three separate roles.
The "Federal Reserve" governors are local business executives who provide data and anecdotal assessments to help Fed makers understand what's happening in the real economy. They play a valuable role, but not one that would in itself be worthy of agreement with the national federal government.
But being a chairman of a regional branch force is obviously a more significant role. Not only as an advisor, but a collector of advice, the board helps to set politics for that branch.
Then it's a big step above to be the leader of one of the 12 regional branches of the Fed. As financial columnist Jim Bianco wrote for Bloomberg Opinion, "Regional Fed banks have large staffs of economists and researchers. Presidents march these resources to support independent thoughts and political approaches." Furthermore, all 12 regional presidents of the eight annual meetings of the Federal Open participate Market Committee, which is the group that makes the Federal Reserve Board's most public work, namely to set the "discount rate" and conduct the Fed's open market operations.
When headlines say that the Federal Reserve loosened or tightened monetary policy, it is the Federal Open Market Committees' decisions that they are talking about. Someone who Cain, who spent years in the general Fed system, culminating in participation in political meetings, is obviously well acquainted with the issues at stake.
In addition, the 12 regional bank chairmen rotate, four per year, as actually elected members of the committee. Cain's tenure in 1995-96 coincided with Kansas City's time as a voting member.
In short, if confirmed to the Federal Reserve Board, Cain would largely perform a role he had already performed a quarter of a century ago. An old Latin proverb applies: Discimus agere agendo, meaning, " We learn to do by doing." If someone has already done a job, he obviously has experience doing it again.
Finally, while it is sensible for most of the seven Fed governors to be economists or bankers, the Fed can also use at least one person with real estate business experience in retail or manufacturing. Especially with nearly a decade as the Fed system director, Cain will understand how to make sense of the volume of information filtering through the system.
Overall, if Cain is not confirmed by the Federal Reserve Board of Governors, President Trump will find someone else with a similar profile, albeit without the mitigating circumstances mentioned above.