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NEW YORK: The United States Senate blocked President Donald Trump’s controversial nomination of Judy Shelton to the Federal Reserve board on Tuesday (November 17), but left a path open for her possible confirmation in the coming weeks .
Shelton, 66, a former economic adviser to Trump’s 2016 presidential campaign, has been criticized for inconsistent and controversial views, including adopting the gold standard and a shifting stance on interest rates when he took control of the White House. went from Democrat Barack Obama to Trump.
Critics say she is too partisan for the job and could jeopardize the independence of the powerful institution that sets interest rates, which includes presidential candidates but does not report to the White House.
Shelton told lawmakers at his February confirmation hearing that “no one tells me what to do.”
Supporters praise an innovative thinker who they say can shake up an institution they see as dominated by “groupthink” because of his consensus-based style of decision-making.
Trump’s Republican Party has a 53-47 majority in the current Senate, but several senators were absent on Tuesday, including two Republicans who were in quarantine due to exposure to the coronavirus. Others joined Democrats in voting “no” in the so-called closing vote.
The vote was 47-50, and Senate Majority Leader Mitch McConnell voted “no” to preserve the option to reconsider Shelton’s nomination later, when colleagues such as Senator Charles Grassley of Iowa and Senator Rick Scott Florida, who are in quarantine, return to the Senate. ground.
A successful vote might require careful timing.
Newly elected Democratic Senator Mark Kelly is eligible to take the oath as soon as Arizona certifies his election results, which are scheduled for November 30. He expects to take office in early December.
Quarantines for COVID-19 typically last 14 days, meaning Grassley and Scott could be back in the Senate by then, health permitting.
The vote on Shelton marks the first time since the establishment of modern Fed governance in 1935 that Congress has voted on a Fed nominee during a dubious session.
Shelton has argued that the nation would be better off returning to the gold standard, and as recently as 2017 criticized the Fed’s power over money and financial markets as “pretty unhealthy.”
During his Senate confirmation process, he called the Fed’s bond purchases and zero interest rates in the latest crisis “extreme.”
His views on rates have moved in step with Trump’s. She lashed out at easy money before her presidency but supported it after she took office, and has expressed skepticism about the Fed’s need to set policies independently of the president and Congress.
Formerly the American executive director of the European Bank for Reconstruction and Development, Shelton was also co-director of the Sound Money Project, part of the libertarian American Institute for Economic Research.
His skepticism about the Fed’s role was part of the call for some Republicans to vote “yes” on Tuesday.
“The Federal Reserve plays too much of a role in shaping our economy,” Marco Rubio, a Republican senator from Florida, said in a statement after the vote. He added that he believes Shelton shares his belief “that relying on the Federal Reserve to boost asset prices is not a substitute for a strong US economy.”
Democrats who voted against Shelton expressed concern about his lack of knowledge about the banking system. Shelton’s unfamiliarity with capital requirements and other loss protections means it would be “unwise” to appoint her to the Federal Reserve Board, Massachusetts Sen. Elizabeth Warren said on Twitter Tuesday afternoon, “especially during this crisis”.
Trump’s other central bank elections have faltered earlier in the process, including former Republican presidential candidate Herman Cain and economic adviser Stephen Moore.
Whether Shelton is ultimately confirmed or not, Trump will have made his mark on the Fed. He has nominated all but one of the five current members to its board.
The White House expressed confidence that Shelton would eventually be confirmed, with spokesman Judd Deere tweeting that she is “incredibly qualified” adding: “The @WhiteHouse fully supports her.”
