Fed board nominees move one step closer to Senate approval

Register now

Judy Shelton, President Trump’s contentious pick for the Federal Reserve’s Board of Governors, cleared a key hurdle to confirmation by winning the approval of a majority on the Senate Banking Committee.

She was backed in a party-line vote Tuesday, 13-12. The committee also voted in favor of Fed nominee Christopher Waller, currently director of research at the St. Louis Fed. His nomination passed 18-7.

Shelton — who has drawn sharp criticism for her unorthodox views on monetary policy and for her sudden willingness to espouse an approach that hews with the president’s — could still fall short before the full Senate, where four Republican defections could block her confirmation. Utah’s Mitt Romney has already said he has “concerns” about the nomination.

Some Shelton critics have warned that Trump might elevate her to replace Jerome Powell when his term ends in 2022, imperiling the independence of the U.S. central bank. That’s assuming the president wins re-election in November and is unhappy with his current Fed chair, whom he’s recently praised after years of harsh criticism for too-tight policy.

Judy Shelton — who has drawn sharp criticism for her unorthodox views on monetary policy — could still fall short before the full Senate, where four Republican defections could block her confirmation.
Judy Shelton — who has drawn sharp criticism for her unorthodox views on monetary policy — could still fall short before the full Senate, where four Republican defections could block her confirmation.

Committee Chair Mike Crapo, Republican of Idaho, said Shelton had affirmed in writing that she believed in Fed independence and that diverse views were important for monetary policy.

Ranking Democrat Sherrod Brown of Ohio in turn issued a scathing critique of Shelton, calling her a “dangerous pick” who represents “a threat to our economy, our democracy, and our country.”

If Senate Majority Leader Mitch McConnell is confident he has 50 Republican votes in hand, he has the power to call a vote before the Senate recesses for its August break.

Shelton holds a doctorate in business administration from the University of Utah and acted as an informal adviser to the Trump campaign in 2016.

A strict inflation hawk, she long favored returning the U.S. to the gold standard and has questioned the need for a central-bank-controlled benchmark interest rate.

When she emerged as a candidate for a Fed post in early 2019, Shelton also began calling for lower interest rates, a contradiction with her earlier views on inflation but in line with Trump’s demands for easier monetary policy. That exposed her to charges her policy decisions would be driven by political loyalties.

“A Chair Shelton could have plenty of capacity to inflict real damage both on the institution but much more importantly on the U.S. economy and the financial system,” said David Wilcox, former director of the Fed’s domestic research and forecasting division.

Shelton, during her testimony at a February hearing, insisted that no one will tell her what to do.

“I wish to emphasize my commitment to honor the constitutional authority of Congress to regulate the value of U.S. money,” Shelton said. “I believe that the independence of the Federal Reserve is a vital aspect of its credibility with the public.”

Waller, a respected economist and Fed insider, won bipartisan support for his confirmation as expected.

Bloomberg News
Federal Reserve Senate Banking Committee Monetary policy Career moves
MORE FROM AMERICAN BANKER