Trump pick for Fed seat takes bipartisan fire

Trump pick for Fed seat takes bipartisan fire
© Greg Nash

Senators in both parties voiced deep concerns Thursday about one of President TrumpDonald John TrumpWinners and losers from the South Carolina debate Five takeaways from the Democratic debate Democrats duke it out in most negative debate so far MORE’s picks to serve on the Federal Reserve Board, raising doubts about the nominee's ability to win confirmation.

Republicans and Democrats on the Senate Banking Committee questioned whether Judy Shelton, a former Trump campaign adviser, should be considered for the Fed governor post given her controversial views on central bank independence, the gold standard and core tenets of economic policy.

Shelton insisted that her unique perspectives would “strengthen the discussion” and would not prevent her from collaborating with other Fed officials.

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“I don't claim to be in the mainstream of economists,” Shelton told lawmakers at her confirmation hearing Thursday.

But senators across the ideological spectrum made clear that Shelton’s explanation of her lengthy paper trail did little to soothe their concerns.

“If you were on the Fed, how would you work with the other members?” asked Sen. Richard ShelbyRichard Craig ShelbyTrump defends handling of coronavirus as Democrats hit him during debate Overnight Health Care — Presented by American Health Care Association — Lawmakers raise alarms over Trump coronavirus response | Top official warns virus appears inevitable in US | Democrats block two Senate abortion bills San Francisco declares state of emergency over coronavirus MORE (Ala.), the senior Republican on the Banking panel. “Could you work with them with the goal of price stability and full employment, or would you really be an outlier?”

Shelby said after the hearing that he remained “concerned” with Shelton’s nomination.

Shelton, the former U.S. director for the European Bank for Reconstruction and Development (EBRD), was nominated to the Fed in January by Trump in tandem with Christopher Waller, the executive vice president of the Federal Reserve Bank of St. Louis.

Waller faced few questions before the committee on Thursday and is likely to sail through the confirmation process. But Shelton is almost certain to be unanimously opposed by Democrats, meaning just four GOP defections could sink her nomination.

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Shelton has spent decades advocating for tying the U.S. dollar to the value of gold in some capacity, an idea widely dismissed by policymakers and economists. She has also reversed her past criticism of low Fed interest rates and called for the central bank to weaken the dollar in response to foreign exchange rates, mirroring the switch made by Trump after he took office in 2017.

“We don't know who we are nominating to the Federal Reserve,” said Sen. Sherrod BrownSherrod Campbell BrownOn The Money: Stocks close with second day of steep losses | Dow falls over 800 points as coronavirus fears grow | Kudlow claims virus has been contained | US expects China to honor trade deal amid outbreak Hillicon Valley: Agencies play catch-up over TikTok security concerns | Senate Dems seek sanctions on Russia over new election meddling | Pentagon unveils AI principles Senate Democrats urge Trump administration to impose sanctions on Russia for election interference MORE (D-Ohio). “Ms. Shelton has disavowed 40 years of her writing, as so many on this panel have shown, to say what she needs to say to be confirmed. It isn’t just my colleagues on the Democratic side of the aisle who are concerned.”

Shelton defended her years of steady advocacy for gold-linked currency as useful historical research and not an idea she would promote within the Fed, even though she has explicitly called on the U.S. to allow the dollar to be exchanged for a set amount of gold.

“Money only moves forward," Shelton said.

Shelton's attempt to distance herself from her past arguments prompted accusations of flip-flopping from Democratic senators.

Democrats also blasted Shelton for missing 42 percent of EBRD meetings during her brief stint as U.S. director, comparing a currency forger to Rosa Parks, and suggesting the sale of public lands to balance the federal budget.

While Shelton is unlikely to garner any Democratic votes, her support for cutting interest rates to weaken the U.S. dollar could cost her the support of Republicans who have condemned Trump for making such demands of the Fed.

“I am concerned about the extent to which you advocate for our monetary policy to be influenced and reactive to the foreign exchange or other factors,” said Sen. Pat ToomeyPatrick (Pat) Joseph ToomeyNSA improperly collected US phone records in October, new documents show Overnight Defense: Pick for South Korean envoy splits with Trump on nuclear threat | McCain blasts move to suspend Korean military exercises | White House defends Trump salute of North Korean general WH backpedals on Trump's 'due process' remark on guns MORE (R-Pa.). “You believe the Fed should actively seek to devalue our currency if other countries are doing it, and I think that’s a very, very dangerous path to go down.”

Several senators also voiced fears about whether Shelton would protect the Fed’s independence given her close ties to Trump, ideological reversal on interest rates and defense of the president’s long-running pressure campaign.

“Isn’t what the president doing here an attempt to influence the Fed?” asked Sen. Tina SmithTina Flint SmithDemocratic senators ask FDA to ban device used to shock disabled students Trump pick for Fed seat takes bipartisan fire Biden leads 2020 pack in congressional endorsements MORE (D-Minn.).

Shelton told senators that while the “independence of the Federal Reserve is a vital aspect of its credibility ... every American, every member of Congress and even the president of the United states has the right to criticize our Federal Reserve.”

Shelton added that she would not “censor” Trump and that “in some ways, it’s refreshing to see” the president's attacks “out in the open” given the well-documented history of Trump's predecessors pressuring the Fed privately.

Several Republican senators loyal to Trump tried to defend Shelton as she faced bipartisan fire.

Sen. Mike CrapoMichael (Mike) Dean CrapoLobbying World Ernst endorses bipartisan Grassley-Wyden bill to lower drug prices Trump pick for Fed seat takes bipartisan fire MORE (R-Idaho), the committee chairman, praised Shelton for her responses and said she would bring “strong leadership” to the Fed.

Sen. Thom TillisThomas (Thom) Roland TillisThe Hill's Campaign Report: What to watch for in Nevada Top GOP super PAC spent money on NC Democrat The Hill's Campaign Report: Warren up, Bloomberg down after brutal debate MORE (R-N.C.) said he was compelled to come support Shelton at the hearing while watching it from his office, accusing his colleagues of holding her and the president to a hypocritical standard.

“We're talking about undue political influence on the Fed. That's what we do everyday when we bring the Fed up before this committee,” Tillis said. “We're trying to assert our political influence, and I don't think the president is any more or less entitled to do that.”

And Sen. Mike RoundsMarion (Mike) Michael RoundsOvernight Defense: Pentagon policy chief resigns at Trump's request | Trump wishes official 'well in his future endeavors' | Armed Services chair warns against Africa drawdown after trip GOP chairman after Africa trip: US military drawdown would have 'real and lasting negative consequences' Trump pick for Fed seat takes bipartisan fire MORE (R-S.D.) warned senators about the dangers of groupthink and urged them to consider bringing a novel perspective to the Fed.

Even so, some steadfast GOP supporters of Trump’s past Fed choices said they weren’t sure if they could back Shelton.

“Nobody wants anybody on the Federal Reserve that has a fatal attraction to nutty ideas,” said Sen. John KennedyJohn Neely KennedyMORE (R-La.). “Now I'm not saying that's the case here, but that was the dialectic going on."

Updated at 12:56 p.m.