Judy Shelton, a lifelong critic of the Federal Reserve and advocate of a return to the gold standard, is one step closer to becoming a member of the central bank’s board of governors.
On Tuesday, the Senate Committee on Banking, Housing and Urban Affairs voted 13-12, following party lines, to advance Shelton’s nomination to the full Senate. He also gave his approval to a less controversial election for another vacant seat on the council: Christopher Waller, currently the director of research for the Federal Reserve Bank of St. Louis.
Several Republicans, including Senators Pat Toomey of Pennsylvania and John Kennedy of Louisiana, who were once critical of Shelton, said before the vote that they had changed their minds. Assuming all Democrats on the committee would vote against the election of the President, as they did, a Republican “no” vote would have derailed the nomination.
Toomey said Shelton gave her “guarantees” in a two-page letter that “she will oppose the use of monetary policy for the purpose of devaluing the dollar.” That, said the senator, “would have been reckless and contrary to legal authorization.”
A Kennedy spokesman said the senator has reviewed Shelton’s writings, which include “Money Meltdown: Restoring Order to the Global Currency System,” as he said he would, and decided to endorse his nomination.
In February, the Banking Committee held a hearing for Shelton and Waller, but since then, the world economy has changed dramatically. Due to the pandemic, global growth has stalled, tens of millions of men and women are unemployed in the United States, and the Federal Reserve has taken unprecedented steps to support workers, employers, and financial markets.
This month, as their “concerns are heightened during this unprecedented health and economic crisis,” Democratic members of the Banking Committee asked Sen. Mike Crapo of Idaho, the committee chairman, to hold another nomination hearing for Shelton. .
In a letter, they said Shelton, who was an advisor to the Trump campaign in 2016, “does not believe the Federal Reserve should protect itself from political whims, and has advocated failed Great Depression era policies as a return to the gold standard and the elimination of deposit insurance, that would make our economy more volatile. “
“We are deeply concerned that the situation we find ourselves in today would have been worse if Dr. Shelton was already on the Board of Governors,” they argued.
“Dr. Shelton is a dangerous choice. Period. Her ideas are far from the mainstream. Her failings, political beliefs and objections to Fed independence worry conservative and liberal economists alike,” said the member of the Classification Committee, Senator Sherrod Brown, D-Ohio, said in a statement.
The Federal Reserve is fiercely independent, but in recent years President Donald Trump has attacked the central bank and its president, Jerome Powell. Shelton has sometimes questioned the independence of the Federal Reserve and questioned some of its policies.
There are seven seats on the Federal Reserve Board of Governors, but it has been operating with just five members since 2018, when former Fed President Janet Yellen resigned. The position for which Waller has been nominated has been vacant since 2014, when Sarah Bloom Raskin resigned to become deputy secretary of the Treasury Department.
During his tenure, Trump unsuccessfully attempted to fill the two vacant seats on the board.
In 2017, he nominated another controversial economist, Marvin Goodfriend, who died of cancer last year. He was a professor at Carnegie Mellon University, and although his nomination was made out of commission, the full Senate never voted for him. In 2019, Nellie Liang, a member of the Brookings Institution, withdrew her name from consideration.
Those were the official nominees, but there have been other potential elections whose names the White House floated, but never sent to Capitol Hill, including Stephen Moore, an economics commentator who has been an informal adviser to Trump, and the former Republican presidential candidate. Herman Cain.
Members of the Federal Reserve Board of Governors serve 14-year terms. If confirmed, Shelton’s term would expire in 2024, and Waller’s term would end in 2030. It is speculated that Trump, if reelected, could consider Shelton to replace Powell, whose term as Fed chairman ends in 2022.
