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If Donald Trump Can Be President, Why Can't Gary Cohn Be Fed Chair?

Weirder things have happened.
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Donald Trump's ascent to the presidency relied in large part on the fact that he wasn't really supposed to be president. We just don't elect guys like this. Forget the truly unsavory stuff (Access Hollywood tape, Russia intrigue, steak preferences) and focus solely on his bio: a non-politician with no government experience whose only qualifications were having a TV show and a bunch of buildings with his name on them. Yet in an electorate bored and disgusted by the political class, these weaknesses were strengths.


In this context, it's not impossible to imagine Gary Cohn similarly bustling his way to the lofty office of Federal Reserve chair. And what was once just idle speculation has now risen to the level of active speculation:

President Donald Trump is increasingly unlikely to nominate Federal Reserve Chair Janet Yellen next year for a second term, four people close to the process said. National Economic Council Director Gary Cohn is now the leading candidate to succeed Yellen as the world’s most important central banker, these people said. Yellen begins two days of congressional testimony on Wednesday, and her own future in the job may come up in questioning.

It doesn't need much spelling out to see that Cohn isn't your typical Fed chair, Goldman credentials notwithstanding. He lacks an economics PhD. His most notable government experience has an expertly coordinated prank with buddy Steve Mnuchin to pretend they had a comprehensive tax policy on hand. Even his Wall Street career had an unorthodox start (sharing a cab with a Wall Street guy and pretending his job as a window salesman gave him expertise in options trading).

Nor do we need to belabor the attributes of Cohn's that Trump might appreciate: his manly brio, his working-class roots, his physical directness. And he seems to have a talent for hitting Trump's main pleasure point: loyalty.

A longtime Cohn friend simply recognized the hallmark talent of a man whose career was built around being a company’s No. 2 guy: managing up. “In general, if you work in a large organization, you support the leader,” he said. “No matter what he actually thinks.”

Yet the most notable similarity between the two, should it actually transpire that Cohn gets the job, isn't so much their unorthodox path to the job but (potentially) an orthodox way of doing the job. Trump campaign on wild-card policies that bridged political divides, but the actual policies the administration has backed are essentially those of a Pence presidency.

Meanwhile Cohn, for all his Fed-outsider status, might not represent such a great departure when it comes to actual monetary policies:

Cohn does not have a track record on monetary policy. But he is viewed as closer to Yellen’s preference for gradual rate hikes. That perception could spur opposition to a Cohn nomination from more hawkish Republican senators, along with a perception that he’s too close with the banking industry.

Here he is saying that the Fed was right to juice the economy, but that he's concerned about lower-for-longer. Not exactly a revolutionary position.

It's worth keeping in mind, however, that Trump wants a Fed chair who will keep rates low to help MAGA but also not rig the economy by keeping rates low. Who knows how a Chairman Cohn might untangle that riddle.

Sources: Cohn is Trump’s top candidate to replace Yellen at Fed [Politico]


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