SPONSORED:

Senate panel advances Trump Fed nominee who recently supported gold standard

Senate panel advances Trump Fed nominee who recently supported gold standard
© Getty Images

President TrumpDonald John TrumpFederal watchdog accuses VOA parent company of wrongdoing under Trump appointee Lawsuit alleges 200K Georgia voters were wrongly purged from registration list Ivanka Trump gives deposition in lawsuit alleging misuse of inauguration funds MORE’s controversial nomination of Judy Shelton to the Federal Reserve won the support of a Senate panel Tuesday, paving the way for a final confirmation vote on her appointment to the central bank’s board of governors.

The Senate Banking Committee voted along party lines to recommend Shelton’s confirmation as a Fed governor, the last hurdle she faced before a full vote in the GOP-controlled Senate on her nomination.

All 13 Republicans on the Banking Committee voted in favor of Shelton, who has drawn criticism for her past support of linking the U.S. dollar to the gold standard, while all 12 Democrats voted in opposition.

ADVERTISEMENT

Shelton’s embattled road to the Fed board appears to be clearing despite early doubts about her viability, including pushback from some GOP senators and the opposition of economists and former Fed officials across the political spectrum. Republicans say that Shelton’s past stances would not impede her service at the central bank, but offer a novel view on the economy.

“Dr. Shelton's experience working for nonprofits and academic institutions forged her deep knowledge of democracy, economic theory and monetary policy that will broaden and diversify the Fed’s perspective,” said Senate Banking Committee Chairman Mike CrapoMichael (Mike) Dean CrapoMcConnell in tough position as House eyes earmark return Mnuchin to put 5B in COVID-19 relief funds beyond successor's reach Democrats accuse Mnuchin of sabotaging economy in dispute with Fed MORE (R-Idaho) ahead of the vote.

“I'm confident that her deep understanding of the Fed's monetary policy toolkit, monetary history, and commitment to maintaining Fed independence will serve the Fed well and its ongoing efforts to stabilize markets and toward its mission of price stability and full employment.”

Shelton is a former U.S. executive director at the European Bank for Reconstruction and Development.

The committee also approved Trump’s nomination of Christopher Waller, executive vice president of the Federal Reserve Bank of St. Louis, to the Fed board by an 18-7 vote, with five Democrats joining all Republicans in support of his nomination. He is expected to be easily confirmed to the Fed board by the full Senate.

ADVERTISEMENT

Trump tapped Shelton and Waller for the Fed board in January after initially announcing his intent to nominate them in July 2019. While Waller is a widely respected pick in the mold of Trump’s past successful Fed appointments, Shelton’s nomination has faced fierce resistance over her ties to the president and an unorthodox approach to monetary policy.

Shelton, like Trump, blasted former Fed Chairwoman Janet YellenJanet Louise YellenBattle for Pentagon post in Biden Cabinet heats up Black leaders express concerns about representation in Biden administration On The Money: Funding bill hits snag as shutdown deadline looms | Pelosi, Schumer endorse 8 billion plan as basis for stimulus talks | Poll: Most Americans support raising taxes on those making at least 0K MORE for keeping interest rates near zero during the recovery from the Great Recession but called for the bank to drastically slash rates after he took office. Both had urged the Fed to lower rates and reduce the value of the U.S. dollar to make American exports relatively cheaper in foreign markets before the coronavirus pandemic forced the central bank into zeroing out rates again.

Shelton had also spent decades arguing in favor of tying the value of the U.S. dollar to gold, an idea widely rejected by economists as impractical and dangerous in the modern central banking system, and called for creating a North American currency union with Canada and Mexico.

“If gold had been at the center of the monetary system, the U.S. and global economies might well have driven over a cliff,” wrote David Wilcox, a former Fed director of research, in an op-ed for The Hill last week. “Shelton’s support for the gold standard is not the only reason why she should not be confirmed by the Senate, but it is high on the list.”

Several fiscal conservatives on the Banking Committee bristled at Shelton’s unconventional views and appeared to oppose her nomination after a brutal confirmation hearing. But Shelton was nonetheless able to win over GOP Sens. Richard ShelbyRichard Craig ShelbyOvernight Defense: Defense bill moving forward despite Trump veto threat over tech fight | Government funding bill hits snag | Top general talks Afghanistan, Pentagon budget On The Money: Funding bill hits snag as shutdown deadline looms | Pelosi, Schumer endorse 8 billion plan as basis for stimulus talks | Poll: Most Americans support raising taxes on those making at least 0K Funding bill hits snag as shutdown deadline looms MORE (Ala.), Pat ToomeyPatrick (Pat) Joseph ToomeyAppeals court rules NSA's bulk phone data collection illegal Dunford withdraws from consideration to chair coronavirus oversight panel GOP senators push for quick, partial reopening of economy MORE (Pa.) and John KennedyJohn Neely KennedyMORE (La.), who were initially resistant to supporting her.

ADVERTISEMENT

Democrats on the committee blasted their Republican colleagues Tuesday for approving Shelton amid the worst economic crisis since the Great Depression. Democrats have slammed Shelton for her controversial and at-times inconsistent views on monetary policy and fear that Trump may tap her to oust Fed Chairman Jerome Powell, a frequent target of the president’s criticism.

“Her flip-flopping, policy beliefs, and objections to Fed independence worry conservative and liberal economists alike and as recently as February, it worried some of my Republican colleagues,” said Sen. Sherrod BrownSherrod Campbell BrownACLU sues DHS for records on purchased cell phone data to track immigrants DHS watchdog to probe agency's tracking of Americans' phone data without a warrant Rare Mnuchin-Powell spat takes center stage at COVID-19 hearing MORE (Ohio), the committee’s top Democrat, ahead of Tuesday's vote.

“Dr. Shelton may not be able to imagine an economic crisis like the one we are in today, but I certainly can imagine how much worse it would be if she were on the Federal Reserve Board right now,” he added.

Democrats had called for another hearing on Shelton’s nomination amid the coronavirus-driven recession, but were rebuffed by Crapo.

The committee chairman's decision to hold a vote on Shelton’s nomination indicates a degree of confidence in her chances before the full Senate. It is rare for any of Trump’s high-profile nominees to be approved by a Senate committee without subsequently being confirmed by the GOP-controlled Senate.

Even so, Shelton has a narrow path toward confirmation if all members of the Senate Democratic caucus oppose her. If no Democrat supports her, the opposition of four Senate Republicans would derail her nomination.

Senate Republicans have already quashed Trump’s past four picks for the Fed board seats Shelton and Waller would fill. 

Former Carnegie Mellon economics professor Marvin Goodfriend was approved by the Banking panel in February 2018, but never received a full confirmation vote after Senate conservatives objected to his nomination. Goodfriend was not renominated when a new Congress convened in 2019 and died of cancer in December of that year.

Former Fed research director Nellie Liang, a Democrat, withdrew her nomination in January 2019 after Republicans voiced concerns with her role implementing the post-crisis banking regulations broadly opposed by the party.

Trump had also announced his plans to nominate economic adviser Stephen MooreStephen MooreThe Hill's Morning Report - Presented by Mastercard - Barr splits with Trump on election; pardon controversy Sunday shows - Virus surge dominates ahead of fraught Thanksgiving holiday Trump ally Stephen Moore: President 'going to leave the office triumphant' MORE and former 2008 Republican presidential candidate Herman CainHerman Cain'SNL' host Dave Chappelle urges Biden voters to be 'humble' winners 18 Trump rallies have led to 30,000 COVID-19 cases: Stanford University study From HBCUs to Capitol Hill: How Congress can play an important role MORE to Fed seats in 2019, but he reversed course after several Republican senators announced their opposition.