Senate conservatives threaten Trump's controversial Fed pick

Senate conservatives threaten Trump's controversial Fed pick
© Greg Nash

Key Senate conservatives could derail President TrumpDonald John TrumpTeachers union launches 0K ad buy calling for education funding in relief bill FDA head pledges 'we will not cut corners' on coronavirus vaccine Let our values drive COVID-19 liability protection MORE’s choice to fill a spot on the Federal Reserve Board, threatening to derail the nomination that has a small margin for GOP opposition.

Sen. Rand PaulRandal (Rand) Howard PaulTrump-backed Hagerty wins Tennessee GOP Senate primary Senators introduce bill to block Trump armed drone sale measure The Hill's Campaign Report: Trump's visit to battleground Ohio overshadowed by coronavirus MORE (R-Ky.) told reporters Thursday that he would vote against Marvin Goodfriend’s nomination to be a Fed governor, according to multiple reports, citing the economist’s unconventional monetary policy proposals.

And a spokesman for Sen. Mike LeeMichael (Mike) Shumway LeeOvernight Defense: Air Force general officially becomes first African American service chief | Senators introduce bill to block Trump armed drone sale measure | State Department's special envoy for Iran is departing the Trump administration Senators introduce bill to block Trump armed drone sale measure Trump signs major conservation bill into law MORE (R-Utah) told The Hill that the conservative senator was "undecided" on Goodfriend's nomination.

Paul’s opposition means Goodfriend must receive unanimous support from the 50 other Senate Republicans to be confirmed, including Sen. John McCainJohn Sidney McCainBill Maher delivers mock eulogy for Trump Hillary Clinton roasts NYT's Maureen Dowd over column CNN's Ana Navarro to host Biden roundtable on making 'Trump a one-term president' MORE, who has missed Senate votes while he recovers from treatment for brain cancer at home in Arizona.

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No Democrats are expected to vote for Goodfriend, meaning that should Goodfriend receive 50 votes, Vice President Pence would have to break the tie to confirm the nominee.

Goodfriend, a Carnegie Mellon professor and former Richmond Fed senior vice president, has drawn criticism for incorrect predictions about rampant inflation during the early 2010s and proposals meant to reduce the value of cash withdrawn from banks in times of crisis.

Goodfriend had proposed placing magnetic strips on currency that would track the length of time a note had been deposited at a bank. The idea is meant to encourage banks to lend money to stimulate the economy when Fed interest rates are already at zero.

The proposal would effectively create negative interest rates, reducing the value of money kept in bank accounts.

Goodfriend has since abandoned the magnetic strip proposal but has expressed a willingness to explore other negative interest rate policies. Former Rep. Ron Paul (R-Texas), Rand Paul's father, introduced a bill in 1999 and 2003 to ban such policies, both of which died without committee or floor action.

The Senate Banking Committee voted to advance his nomination Thursday morning 13 to 12 along party lines.

Updated at 3:03 p.m.