Trump's "The Apprentice: Federal Reserve Chair" Is Lacking Sizzle

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Last week's news that Federal Reserve Vice Chair Stanley Fischer will retire next month leaves a gaping hole of four vacancies on the central bank's board, and offers President Donald Trump an unparalleled opportunity to shape U.S. monetary policy for the foreseeable future.

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It's hard to overstate how much these nominations will impact the future of the U.S. financial system. Yellen and Fischer's successors will need to manage the drawdown of the bank's balance sheet, as well as the gradual return to higher interest rates -- if indeed those things ever occur. They also will determine how far the deregulatory agenda of the Trump administration and Wall Street advances, especially since the Fed occupies a first-among-equals role in the financial regulatory world. Fischer, Yellen and others have launched a full-throated defense of the regulatory changes mandated by Dodd-Frank, but if Trump fills all four board seats with candidates intent on rolling back those rules or not enforcing them, they'll be able to vote through whatever changes they desire.

And, while Trump's nominations in other policy areas have ranged from curious to terrifying, all the rumored candidates for Fed posts have been a surprisingly vanilla and qualified group of standard Republican policymakers. Among those rumored and possible candidates for the board vacancies and chair positions include:

Gary Cohn - Washington insiders have assumed for months that Cohn is the frontrunner for Yellen's seat when it opens up early next year, but his recent decision to publicly contradict Trump's response to the events in Charlottesville reportedly has him iced out of the Oval Office's cool clique and is, literally, getting the cold shoulder from Trump. "Globalist Gary" is known to covet Yellen's role, and would there be any more gratifying ending to his devil's bargain with Trump than for the piqued president to nominate him to the Vice Chair role instead?

Kevin Warsh - A former board member who stepped down from his role in early 2011, and would likely only be enticed back for the bank's top role, though he could also be open to a role as vice chair on a board dominated by Republican appointees. He was the youngest nominee ever for a Fed board role when he was first appointed, but he impressed his colleagues at the time and acquitted himself well during the financial crisis. Transcripts of FOMC meetings at the time show other board members viewed him as the foremost expert on the workings of global financial markets. On monetary policy, Warsh would probably lead a more hawkish bank than Yellen or Bernanke.

Marvin Goodfriend: Goodfriend's name has been circulating as a potential board member as well. Goodfriend is a bona fide conservative economist who has been critical of quantitative easing and the low rates of the last decade. Goodfriend is a product of the Richmond Fed, which provides itself on focusing on price stability and whose presidents are often the most hawkish members of the FOMC.

Dr. John Taylor: In certain conservative circles, the nomination of Taylor would be a dream scenario and cause for celebration. The Stanford academic is a longtime critic of low interest rate policies, policy gadfly and creator of the eponymous Taylor Rule, a supposed tool for determining interest rates which conservative lawmakers occasionally threaten to make the Fed policymakers heed. It would be difficult for Taylor to get the votes needed in the Senate, however, and any cursory study into his beloved rule reveals that is actually not that useful to ... very wrong.

Randal Quarles: Quarles is already on his way to filling one of those vacancies and becoming the board's vice chair for supervision, a role in which, ironically, he will read the forces of deregulation into the breach.

Of course, these are the leading candidates assuming Trump continues with the weirdly buttoned-down approach he's taken to the Fed thus far -- an approach which has been slow and revealed the Fed to not be a major priority for the administration. We'll find out soon whether more interest rate hikes and a more rancorous debate about financial regulation drives Trump down a more unconventional path.

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