EDITOR NOTE: What’s made Judy Shelton an ‘outlier’ over the course of her entire career is that she, like America’s founders who penned the US Constitution, is a strong advocate for ‘sound money,’ something that, in the halls of government, has become a controversial belief (however ironic that may sound). Another irony: Republicans and Democrats are concerned that with Shelton on the Fed’s board, the Fed may no longer be ‘independent’ (as if it is now). Here’s another prospect: should Trump be re-elected in November, what if Trump replaces Powell with Shelton? Might that mean a return to the Gold Standard?
The Senate Banking Committee plans to move forward with the nomination of controversial economist Judy Shelton to the Federal Reserve Board, setting the stage for a political battle as the central bank tries to shore up the economy during the worst recession in decades.
The nomination of Shelton appeared in jeopardy earlier this year as Republicans and Democrats on the banking panel expressed concerns over her views on the independence of the Fed from the White House, as well as her advocacy in the past for returning the United States to the gold standard.
The committee on Friday announced that a vote on Shelton’s nomination will take place July 21. Democrats swiftly criticized the move and are calling for another hearing. It is unclear whether she has enough support on the Senate Banking Committee to advancer her nomination to the full Senate. Pushback by one Republican on the panel could thwart a simple majority and derail the nomination.
Trump’s Fed nominee Judy Shelton could be in trouble as key GOP senators express concerns about her as an ‘outlier’
In a letter to Banking Committee Chairman Mike Crapo (R-Idaho), all 12 Democrats on the panel called for another hearing “to make sure that members of the Federal Reserve can take on the challenges of an economic crisis capably and independently.”
“We are now in an economic crisis worse than the one Dr. Shelton was asked about at her confirmation hearing,” the senators wrote. “Based on her answers at the hearing, we are deeply concerned that the situation we are in today would have been worse if Dr. Shelton were already sitting on the Board of Governors.”
In February, Republican senators said they were undecided about giving Shelton one of the two open seats on the Fed’s seven-seat board. After a confirmation hearing that month, Sen. Patrick J. Toomey (Pa.) and Sen. Richard C. Shelby (Ala.), among the top Republicans on the Banking Committee, told reporters that they had concerns about Shelton’s views.
Toomey said he didn’t know whether Shelton could uphold the central bank’s independence, though he later said he would support her. Shelby has said Shelton “could be an outlier” for the role.
That was before the coronavirus pandemic effectively shut down the U.S. economy, putting the Fed under intense pressure to blunt the impacts of a devastating economic contraction. In March, the Fed slashed interest rates to zero and quickly moved to flood the markets with liquidity and roll out emergency lending programs.
Fed’s Main Street lending program doesn’t have many large banks making loans to new customers
Roberto Perli, a former Fed official and founding partner and head of global policy at Cornerstone Macro, said the nomination of Shelton was politically motivated. If confirmed as a Fed governor, Shelton wouldn’t have much power to sway the thinking of the entire board.
But there is speculation that if Trump is reelected in November, he could tap Shelton to replace the current chair, Jerome H. Powell, who has often been a target of Trump’s attacks.
“That’s a whole different game,” Perli said.
Originally posted on Washington Post