President Trump is struggling to win his fight to reshape the Federal Reserve with Republicans rebelling over a potential nominee and the bank’s chairman resisting calls to cut interest rates.
The independent central bank has long been a popular target for the president who has hammered it over its policies. But despite Trump’s persistent criticism, his efforts to shake up the bank and influence its decisions have fallen short.
{mosads}Four Republican senators this week announced they would reject Herman Cain if Trump appointed him to the Federal Reserve’s Board of Governors, a move the president floated last week. Cain is now reportedly weighing withdrawing his name from consideration.
It’s only the latest blow to Trump, marking the third time his own party has derailed one of his picks for the central bank.
Trump is also seeing push back from Fed Chairman Jerome Powell, who is increasingly defending the bank’s independence in public.
Trump has repeatedly hammered away at Powell to do more to stimulate the economy and even reportedly discussed firing him. While the two had dinner in February, Trump has continued to criticize Powell’s decisions.
The chairman in response has tried to show his distance from the president.
Powell, a Republican, briefed House Democrats during their annual retreat on Thursday, disavowing partisan politics and asserting his independence. Powell also reportedly spoke about the importance of U.S. leadership.
“American leadership is the gold standard for the postwar period,” Powell said, according to the Washington Post. “We designed the post-World War II architecture of democracy.”
Powell said that should continue, a remark some in the room reportedly saw as a shot at Trump’s foreign policy.
Trump must still fill the two open spots on the Fed board. And with a lower threshold for nominees in the Senate, he will have ample opportunity to reshape the bank.
But Fed watchers say Trump has failed to build consensus among Republicans and struggled to find nominees to pass Senate scrutiny.
“The more the president surprises or embarrasses senior Republicans, the more likely they seem to be to resist it,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics.
“The president expresses his views very strongly and ideologically. But there’s often at least some folks who think the same way with more of academic pedigree or CV to back it up.”
Trump’s war with the Fed started before his presidency. Then-candidate Trump hammered Obama Fed chief Janet Yellen during the 2016 race, accusing her of keeping rates low to help Democrats.
In office, the Fed invoked Trump’s ire by raising interest rates seven times over his first two years as the economy accelerated and unemployment sunk toward record lows.
Four of those increases occurred under Powell, who Trump appointed to chair the Fed in 2017 to replace Yellen.
After elevating Powell, who joined the Fed in 2012, and adding three establishment-friendly Republicans to the bank, Trump unsuccessfully tried to tap board members likely to share his support for lower rates.
Trump last fall nominated former Fed director Nellie Liang, a Democrat who shaped the bank’s post-crisis regulatory division. She withdrew her nomination earlier this year amid objections from Republicans.
Trump’s nomination of Carnegie Mellon professor Marvin Goodfriend has also stalled in the Senate over objections from conservatives to his controversial policy proposals.
The president has since floated two Republican loyalists, Cain and Stephen Moore, who both echoed his opposition to Fed rate hikes.
“Trump has shifted to Trump mode. He wants people who like him at the Fed,” wrote Ian Katz, director at Capital Alpha Partners, in a research note last week.
Senate Republicans have sounded off about being blindsided by Trump’s unconventional picks.
“This is a nontraditional presidency, and the president now figures he doesn’t need a lot of advisers because he wants to do it himself,” said Sen. John Cornyn (R-Texas), a member of the GOP leadership team. “There’s a lot of informal mechanisms and avenues for sharing information that are not really working very well now.”
Cain’s nomination is all but doomed after four Republicans announced their opposition. And several GOP senators have expressed concerns about Moore’s fierce partisanship and ties to Trump.
Moore, a former Trump campaign adviser and an opinion contributor, has been criticized by a slew of right-leaning economists over his fierce partisanship and what they consider dubious economic claims.
Some Fed-watchers, though, say Cain’s troubles could boost Moore’s chances, making Republicans wary of bucking the president again. Moore’s long tenure in conservative circles has also endeared him to many Republicans.
But Moore will also face tough scrutiny over his credentials from centrist Republicans and opposition from Democrats.
{mossecondads}Sen. Elizabeth Warren (D-Mass.), sent letters to Moore and Cain on Friday asking them to explain past controversial statements that would play a central role in their confirmation hearing before the Senate Banking Committee.
Warren, a member of the banking panel, said the statements “strongly suggest that you lack the capacity to exercise the seriousness, care, consistency, and political independence expected of members of the Board of Governors by policymakers and the American public across the political spectrum.”
Trump’s consideration of Moore and Cain though make it clear the president is not pulling back in his fight with the Fed.
“In the early days of the Trump administration, everyone agreed that the president had a chance to remake the Fed to his liking,” Katz said in his note.
“He didn’t do it then, but apparently he’s trying to make up for lost time,” he added.