Trump Is Said to Decide Against Adviser Cohn for Fed Chair
President Donald Trump does not intend to appoint NEC Director Gary Cohn to lead the Federal Reserve.
(Bloomberg) -- President Donald Trump does not intend to appoint National Economic Council Director Gary Cohn to lead the Federal Reserve, three people familiar with the matter said.
Trump has privately told people at least twice in the last week that he would not appoint Cohn as Fed chair, according to two people who met with him. They asked not to be identified discussing private conversations with the president.
Trump has told advisers that Cohn is doing a great job in his current role and that he wants to keep him at the White House through congressional consideration of his proposed tax overhaul, according to a person familiar with the conversations.
“No decision has been made and no candidate has been ruled out but Gary’s role is too crucial to getting tax reform done,” a senior administration official familiar with the president’s thinking said. It may be “too important for him to continue to be the lead, for him to announce a change at this time.”
Cohn is likely to leave the White House soon after Congress disposes with the tax plan, two people said. Cohn declined to comment.
The former Goldman Sachs Group Inc. banker’s prospects at landing the Fed job had been dwindling for a while -- Trump stopped talking about him publicly as a candidate a week ago. Cohn’s elimination whittles the list of contenders down to four people: the current chair, Janet Yellen, Fed Board Governor Jerome Powell, Stanford University economist John Taylor and former Fed Governor Kevin Warsh.
Straw Poll
In public and in private in the last week, Trump has left out Warsh and Cohn when discussing his decision. He said in an interview with Fox Business Network broadcast Sunday that he was deciding between Yellen, Powell, Taylor and “a couple others,” without naming them. On Tuesday, in a closed-door meeting with Republican senators, he asked for a show of hands in support of Yellen, Powell or Taylor -- but not Cohn or Warsh, according to Senator Tim Scott of South Carolina, who participated in the meeting.
Scott said that Taylor appeared to win the president’s ad hoc straw poll. Trump is being deliberative with the choice, understanding that it’s one of the most crucial decisions of his first term, one person familiar with the matter said.
Cohn’s relationship with Trump suffered after the former Goldman Sachs president criticized the U.S. president in August for his response to violent protests by white supremacists in Charlottesville, Virginia. One person familiar with the relationship said that Trump also has been frustrated with the pace of the tax overhaul.
Trump told Fox Business Network host Lou Dobbs that he’s narrowed his search to two or three people, in an interview to be broadcast Wednesday. Dobbs told him that Yellen “might be worth keeping,” and Trump responded that “I would certainly think about it,” according to excerpts the network released.
Yellen is not popular among many Republicans and Trump advisers, however. Three Republicans on the House Financial Services Committee sent a letter to Trump on Wednesday urging him to select “new leadership” at the Fed. The letter, circulated by Representative Warren Davidson of Ohio and also signed by Alex Mooney of West Virginia and Ted Budd of North Carolina, didn’t mention Yellen by name.
In the letter, the lawmakers criticized Fed decisions under Yellen’s leadership, including the central bank’s handling of international regulatory agreements.
Cohn’s Qualifications
Within the White House, there’s been debate about whether Cohn is qualified to lead the Fed, one person involved in the discussions said. The last three central bank chiefs were Ph.D. economists, an academic credential Cohn lacks. While Trump’s advisers agree that Cohn is a formidable personality qualified to run a large bank, the job of Fed chair demands an ability to generate consensus among the board of governors, and there is doubt about whether Cohn is well suited to such a role, the person said.
Cohn made it onto Trump’s shortlist thanks to his grasp of regulatory issues and his decisiveness as a leader at Goldman Sachs and in the White House, the person said. Trump also publicly floated the idea of appointing Cohn as Fed chairman himself, in a July interview with the Wall Street Journal -- shortly after which Cohn recused himself from advising the president on the search, according to people familiar with his decision.
Warsh’s consideration for Fed chair meanwhile has rekindled an old feud between him and Fed Governor Randal Quarles, who was sworn in this month as vice chairman of bank supervision. Quarles has told friends that he doesn’t think Warsh is qualified to lead the world’s most powerful central bank, according to people familiar with his remarks.
Treasury Secretary Steven Mnuchin, who has been assisting Trump with the Fed chair search, is aware of Quarles’s concerns and also doesn’t support Warsh for the job, two people familiar with his thinking have said.
--With assistance from Saleha Mohsin and Robert Schmidt
To contact the reporters on this story: Kevin Cirilli in Washington at kcirilli@bloomberg.net, Jennifer Jacobs in Washington at jjacobs68@bloomberg.net, Margaret Talev in Washington at mtalev@bloomberg.net.
To contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, Joshua Gallu
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