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There should never be a political appointment to the Federal Reserve, J.P. Morgan Chase International chairman Jacob Frenkel told CNBC on Thursday.
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“Central bank independence is one of the most important pillars of economic policy that can generate stability, and the absence of it can generate instability,” he said in an interview with Sara Eisen on “Closing Bell.”
Frenkel was specifically asked about businessman Herman Cain and conservative economist Steven Moore, both picks of President Donald Trump to fill open seats on the Fed’s board. Neither have been formally nominated, but both men share Trump’s philosophy for the economy and the direction of interest rates, Vice President Mike Pence said in an interview with CNBC on Wednesday.
“Especially in the modern era, with capital markets being so complex, being a Fed governor or being in general a central banker is a profession,” Frankel said. “It’s not a political prize or medal for somebody who supported somebody else. The stakes are very, very high.”
On Thursday, it appeared Cain’s nomination was doomed after Republican Sen. Kevin Cramer of North Dakota became the fourth member of his party’s caucus to say he’d vote against the former pizza executive. That wouldn’t leave Cain with enough votes to be confirmed, unless Democrats crossed the aisle to support him.
However, prominent Democrats have come out against the potential nominees. House Speaker Nancy Pelosi of California called Cain and Moore “the worst, ill-suited appointments that the president could come up with.”
“The Fed should be determining the rates, not any politicians,” Pelosi said. “That is a dangerous thing for an economy, when a central bank of the country has political influence. It’s wrong.”
Frenkel likened the Fed to another profession where knowledge is key.
“You would not give the license to fly an airplane just to a friend, you would need him to be professional,” he said. “And let me tell you, the economy is a very large complex airplane.”
— CNBC’s Christina Wilkie, Karen James Sloan and Ylan Mui contributed to this report.