By Paul Kiernan 

WASHINGTON -- Herman Cain withdrew from consideration for the Federal Reserve Board on Monday, saying he did so primarily because of the salary, not the Senate opposition he faced, in a setback for President Trump's efforts to place a political ally on the central bank.

"It's an honor, it's prestigious, and I really wanted to do it, emotionally," Mr. Cain said in an interview Monday, a few hours after informing the White House of his decision. "But factually, it is a big cut in pay," he said, referring to the $183,100 annual salary of a Fed governor.

Mr. Cain, a former GOP presidential candidate and restaurant executive, bowed out Monday less than three weeks after Mr. Trump said on April 4 that he was "the man" to fill one of two remaining vacancies on the powerful Fed board. Mr. Trump's choice drew criticism on both Wall Street and Capitol Hill because of Mr. Cain's strong partisanship and allegations of sexual harassment, which he has denied.

Mr. Cain said that the prospect of a losing confirmation battle didn't factor into his decision. Earlier this month, four GOP senators said publicly they would oppose his nomination, effectively sinking his chances at being confirmed. One of the senators, Mitt Romney of Utah, said Mr. Cain was "far too much of a partisan to be in that role."

"My friend Herman Cain, a truly wonderful man, has asked me not to nominate him for a seat on the Federal Reserve Board," Mr. Trump, a Republican, wrote in a tweet Monday. "I will respect his wishes."

Mr. Cain had said in an interview last week he remained "very committed" to continuing through what he described as a "cumbersome" process of vetting candidates before they are formally nominated to the Senate for confirmation. He said then that he has had a "very blessed, prosperous career," and that "there comes a time in your life where making more money...isn't as important as making an impact."

He said Monday, however, that when White House officials said in January he was being considered for the Fed, he was so overcome with emotion that he didn't even look up how much the job would pay. Once he learned the amount and that he would have to forgo his paid speaking engagements, he said his income would be insufficient. "My biggest passion is making money," he said Monday.

Alex Conant, a GOP strategist, said he views Mr. Cain's potential nomination as "a trial balloon that popped" once enough Senate Republicans expressed opposition. In such cases, the White House normally avoids embarrassing would-be candidates by withdrawing their nominations, and instead seeks to provide them with a clear enough view of their prospects that they bow out. "I'm sure the salary wasn't decisive, but clearly there were going to be other costs associated with this as well, in terms of public scrutiny and public criticism," he said.

Since suspending his bid for the 2012 Republican presidential nomination because of the harassment accusations, Mr. Cain has occupied himself primarily as a paid speaker and political commentator who offers vocal support of Mr. Trump and his policies. A former chief executive of Godfather's Pizza, he cast himself as a business-savvy alternative to the career academics and economists whose expertise underpins Fed policies.

Mr. Trump's tapping of Mr. Cain and fellow conservative pundit Stephen Moore for the two vacancies on the seven-seat Fed board came after the president had grown increasingly critical of the central bank, which he has said is undermining his administration's efforts to boost growth.

Under the leadership of Jerome Powell, Mr. Trump's choice for Fed chairman, the central bank raised interest rates four times in 2018 to keep the economy on an even keel.

In the case of his first six picks to the central bank -- four of which were confirmed by the Senate -- Mr. Trump ran a traditional personnel process in which staff culled through the candidate pool and the president signed off on the finalists. This resulted in a board of governors made up largely of policy experts who received bipartisan support in Senate confirmation hearings.

Eighteen months later, the process looks very different -- in large part because of Mr. Trump's disappointment with his choice of Mr. Powell. Now, Mr. Trump's mantra is: "I want my own guys," according to a person familiar with the matter.

Mr. Cain said last week that Mr. Trump's top economic adviser, Lawrence Kudlow, called him in January and surprised him with an invitation to the White House to talk about the Fed with Mr. Trump. At the meeting, which lasted about 30 minutes in the Oval Office, Mr. Cain said he told the president and Mr. Kudlow that he shared their view of Fed policy.

"Well, there have been times when I felt that the Fed raised rates too quick,' " Mr. Cain recalled telling them. "The president asked me one simple question... 'Would you consider doing this if you make it through the process?' I said yes. Didn't hesitate," he added.

Within days, Mr. Kudlow said Mr. Cain was being considered for the job.

The weeks passed. Mr. Kudlow called once to say, "Hang in there.... The president and I are still behind you," Mr. Cain said last week, adding that he wasn't sure when that was. He also spoke with Mr. Trump once since April 4, with the president calling to "reconfirm that I was still in the fight."

Meanwhile, Mr. Cain has continued putting together videos featuring himself talking up Mr. Trump's policies and railing against Democrats, abortion rights, Medicare for All, Islamic terrorism, the media, illegal immigration and other issues. The content, often inflammatory, did little to ease concerns about his partisanship.

"The shift toward types of candidates like Moore and Cain is a signal that the administration is treating the Fed differently now," said Michael Gapen, an economist at Barclays.

Mr. Trump said in March he intended to nominate Mr. Moore, one of his former campaign advisers, after seeing an op-ed in The Wall Street Journal co-written by Mr. Moore and criticizing the Fed.

The implications of Mr. Cain's withdrawal for Mr. Moore are unclear. Some analysts have said it could bolster Mr. Moore's confirmation chances, because Republicans would be reluctant to reject both of Mr. Trump's nominees. On the other hand, Mr. Cain's defeat could embolden Mr. Moore's critics to take a firmer stand against his confirmation by highlighting how both men were chosen because of their public loyalty to Mr. Trump. Both men have expressed similar views that favored tighter monetary policy during the Obama administration and easier policy that might help Mr. Trump in his re-election bid next year.

Mr. Powell has repeatedly said the central bank doesn't take political considerations into account in setting policy, basing it instead on what's best for the economy.

As Mr. Cain's odds of Senate confirmation appeared to lengthen, officials sought to temper public expectations he would be nominated. On April 16, Mr. Kudlow said: "It will probably be up to Herman Cain if he wants to stay in that process or not." Mr. Cain said he hadn't been asked to withdraw by either the White House or members of Congress.

In a conference call a week ago, staff from Mr. Kudlow's team and the White House Personnel Office briefed him on the extensive list of activities he would have to give up to join the Fed. These included his paid public speaking arrangements, his website, his daily political commentary and a spot on the board of a company that makes powdered peanut butter. Mr. Cain said he had already resigned from the board of a pro-Trump political-action committee.

"Do you want a horse kept in the stable...or do you want to put this horse out on the racetrack and let him run?" Mr. Cain said Monday. "I'm a racehorse, OK? And working from the Fed, I would have been severely hampered in a lot of things that I could say and do. I did not like that prospect."

He added that Mr. Kudlow hadn't gone into detail about the requirements for joining the Fed board when the two previously spoke.

Mr. Cain said that over the past weekend, he sat at his kitchen table with a cup of hot tea and looked over the financial implications of signing up for a fixed salary.

"My company generates revenue from my website, from my digital show, from my keynote speaking," Mr. Cain said. "When I looked at those objectively and compared that revenue to the fixed income I would get being a Federal Reserve Board member, just looking at the numbers, it was too big of a disparity."

--Alex Leary contributed to this article.

Write to Paul Kiernan at paul.kiernan@wsj.com

(END) Dow Jones Newswires

April 22, 2019 19:37 ET (23:37 GMT)

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