President Donald Trump said Monday that Herman Cain has withdrawn from consideration for a seat on the Federal Reserve's board amid a focus on past scandals and doubts about his qualifications for the role.
Cain is a former CEO of Godfather's Pizza who dropped out of the 2012 presidential race as he faced allegations of sexual harassment and infidelity. The issues resurfaced after Trump said he intended to nominate Cain to the central bank's board of governors.
Trump tweeted Monday that "My friend Herman Cain, a truly wonderful man, has asked me not to nominate him for a seat on the Federal Reserve Board. I will respect his wishes."
Cain's nomination was all but doomed earlier this month when four Republican senators said they wouldn't vote to confirm him if he were nominated. The GOP holds just a three-seat majority in the Senate. Senate Majority Leader Mitch McConnell refused to say 10 days ago whether the chamber would confirm Cain.
"There were so many things about (Cain) that were red flags," including his lack of understanding of monetary policy, said Diane Swonk, chief economist at Grant Thornton and longtime Fed watcher. Cain has served on the board of the Federal Reserve Bank of Kansas City but didn't participate in any interest rate decisions in that position.
Trump is also considering conservative ally Stephen Moore for a separate vacancy on the Fed's seven-member board.
Trump's picks of Cain and Moore raised concerns about the Fed's ability to remain politically independent. Last fall, Cain co-founded a pro-Trump super political action committee, America Fighting Back PAC. It features a photo of the president on its website and says, "We must protect Donald Trump and his agenda from impeachment."
The potential nominations surfaced after Trump spent months attacking his pick to lead the Fed, Jerome Powell, and other Fed officials for raising interest rates four times last year. Those rate hikes hurt the stock market and were unnecessary because there was no inflation threat, Trump has said.
At a meeting in March, Fed policymakers indicated that they expected to keep rates unchanged this year, a sharp change from December, when they suggested that they would lift short-term rates two more times.
The Fed board, along with presidents of the Fed's regional banks, plays a critical role in the U.S. economy, holding meetings to debate and vote on whether to raise their benchmark interest rate. That rate, in turn, affects everything from mortgage rates to the interest rate on auto loans and the interest paid on savings accounts. The Fed typically increases its benchmark rate when it worries inflation is about to accelerate, or cuts it to accelerate growth.
Like Moore and Trump himself, Cain has criticized the central bank's policies. In a 2012 Wall Street Journal column, Cain argued that the Fed's low interest rate policies had distorted the value of the dollar. He advocated a return to the gold standard as a way to control inflation, a position that most economists disagree with. Many economic historians argue that the gold standard, which fixes the dollar's value to a specific amount of gold, worsened the Great Depression.
Cain dropped out of the race for the 2012 Republican presidential nomination after allegations that he had engaged in sexual harassment when he led the National Restaurant Association in the 1990s. An Atlanta woman also said she had conducted an extramarital affair with Cain for more than 13 years.
Cain called the allegations false but said he had "made mistakes in my life."
Before leaving the race, Cain had proposed a "9-9-9" tax plan that called for replacing the current tax system with a flat 9 percent business and individual income tax, and a 9 percent sales tax.