Tuesday May 18th, 2021 9:52AM

Senate panel approves Trump's questionable Fed nominee

By The Associated Press
Related Articles
  Contact Editor

WASHINGTON (AP) — The Senate Banking Committee on Tuesday approved President Donald Trump's choice of Judy Shelton for the Federal Reserve board on a party-line vote, overcoming widespread questions about her qualifications for the Fed.

Committee Chairman Sen. Mike Crapo, Republican of Idaho, said that Shelton had reassured him and other GOP senators that she recognizes the Federal Reserve's independence from the rest of the government and also supports insuring bank deposits — widely accepted policies that she had previously questioned.

Crapo also noted Shelton's comments during a February hearing that she does not support returning to the gold standard, in which the value of the dollar is tied to gold, even though she had advocated doing so in the past. Instead, Crapo said, Shelton regards the gold standard as a topic at least worthy of study.

“Many have tried to characterize her views on the gold standard ... as outside the mainstream and disqualifying for this position,” Crapo said. "I strongly disagree with that characterization.”

The committee also voted to back the nomination of Christopher Waller, the research director at the St. Louis Federal Reserve Bank, to fill a final open seat on the Fed's board of governors.

THIS IS A BREAKING NEWS UPDATE. AP's earlier story is below:

In a shift, the Senate Banking Committee is likely to back President Donald Trump's unconventional nomination of Judy Shelton for the Federal Reserve's Board of Governors in a party-line vote Tuesday.

The committee's support would move Shelton's nomination to the full Senate, which would have until the end of the year to confirm or reject it.

Late Monday, Sen. John Kennedy, Republican of Louisiana, said he would support Shelton's nomination, essentially guaranteeing that she would win the votes of all 13 GOP senators on the committee. The Democrats have 12 members on the panel. Kennedy had previously said he was undecided.

Shelton's unorthodox views and questionable credentials have drawn widespread opposition among economists and many former Fed officials. She has previously voiced support for linking the U.S. dollar's value to gold, has expressed skepticism about the Fed's political independence, and has supported lower interest rates since Trump's election after having criticized them under President Barack Obama.

Most mainstream economists regard any return to a gold standard as reckless, arguing that it would cause more and deeper recessions by limiting the Fed's ability to cut interest rates to fight downturns. At a hearing in February, Shelton retreated from her previous stance and said she “would not advocate going back to a prior historical monetary arrangement.”

Still, her nomination appeared to stall at that hearing after three Republican senators said they were skeptical enough about her suitability for the Fed to either oppose her nomination or declare themselves undecided.

One of them, Sen. Richard Shelby of Alabama, said he was bothered by “some of your writings.” Another, Sen. Pat Toomey of Pennsylvania, criticized her view that the Fed should cheapen the dollar if other nations appeared to be manipulating their own currencies. After the hearing, Kennedy expressed skepticism about her nomination.

Kennedy had grilled Shelton on how she would respond to a recession if she were able to unilaterally set Fed policy. Shelton replied that she would cut the central bank's benchmark short-term interest rate to zero and start buying $80 billion a month in Treasury bond purchases — policies that she had denounced when the Fed pursued them after the Great Recession.

But Shelton's prospects eventually brightened. Toomey said he would support Shelton after she had reassured him that she would not seek to lower the value of the dollar. Shelby said that if all other Republicans supported her nomination, he wouldn’t block it.

As a member of the Fed's powerful board of governors, Shelton would vote on the Fed's rate decisions and on banking regulation. The governors also vote on whether to institute emergency measures, such as the Fed's decision in March to start buying corporate bonds for the first time.

Many of Shelton's critics fear that if she is confirmed as a central bank governor and Trump is re-elected, the president could tap her to succeed Jerome Powell as chair when Powell's chairmanship ends in 2022.

David Wilcox, a senior fellow at the Peterson Institute for International Economics and a former director of research and statistics at the Fed, noted that even as a lone governor, Shelton could potentially slow the Fed's decision-making.

“Time and energy would be consumed batting away ... proposals that were consigned to the dustbin of history decades ago," Wilcox said.

Some analysts say that the perception that Trump appears less likely to win re-election may boost Shelton's prospects because it makes it less likely that he could elevate her to the Fed's chairmanship. The full Senate could even wait until after the election is over to vote on her nomination.

Since Shelton's hearing in February, the coronavirus pandemic has plunged the U.S. economy into its worst downturn since the Depression. Democrats on the Banking Committee have asked the panel's chairman, Michael Crapo, an Idaho Republican, for a second hearing given the drastic deterioration in the economy since the February session.

Shelton served as an economic adviser to Trump’s transition team and then as U.S. executive director for the European Bank for Reconstruction and Development, which helps former communist countries transition to market economies. She holds a Ph.D. in business administration from the University of Utah.

In addition to Shelton, Trump has nominated Christopher Waller, research director at the St. Louis Federal Reserve Bank, for a second vacancy on the seven-member Fed board. Waller, who drew much less attention at the same February hearing where Shelton appeared, is seen as a far more conventional and qualified choice for the Fed. Some of his research examines the benefits of the central bank’s independence from political interference.

Waller has attended the Federal Reserve's policy meetings for several years as a staffer. Before joining the St. Louis Fed, he worked as an academic, researching monetary policy, for 25 years.

  • Associated Categories: Associated Press (AP), AP Online Headlines - Washington, AP Online Congress News, AP Business, AP Business - Economy, AP Business - Industries, AP Business - Financial Services
© Copyright 2021
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Senate panel approves Trump's questionable Fed nominee
The Senate Banking Committee approved President Donald Trump’s controversial nominee for the Federal Reserve, Judy Shelton, on a party-line vote Tuesday
2:39PM ( 7 minutes ago )
Sanger's name to be dropped from NYC clinic over eugenics
Planned Parenthood of Greater New York says it will remove the name of pioneering birth control advocate Margaret Sanger from its Manhattan health clinic because of her “harmful connections to the eugenics movement
2:28PM ( 19 minutes ago )
Trump excluding those in US illegally from reapportionment
President Donald Trump has signed a memorandum that seeks to bar people in the U.S. illegally from being counted in congressional reapportionment
2:27PM ( 20 minutes ago )
Associated Press (AP)
Next virus aid package could easily swell past $1 trillion
The price tag for the next COVID-19 aid package could quickly swell above $1 trillion
2:10PM ( 37 minutes ago )
Trump to send federal agents to Chicago, maybe other cities
President Donald Trump is planning to deploy federal agents to Chicago and possibly other Democrat-run cities as he continues to assert federal power and use the Department of Homeland Security in unprecedented ways
2:05PM ( 41 minutes ago )
Report: UK officials 'avoided' looking into Russian meddling
A long-awaited report on Russian meddling in British politics criticized the U.K. government for failing to investigate whether Moscow interfered in the 2016 Brexit referendum, with the document’s authors describing the lack of curiosity about this threat to democracy as a major failure at the heart of power
1:56PM ( 51 minutes ago )
AP Online Headlines - Washington
Fear of China driving Hong Kong extradition concerns
A year ago, an extradition bill that could have sent criminal suspects to face trial in mainland China sparked Hong Kong’s largest protests since its return to China in 1997
11:16AM ( 3 hours ago )
Senate panel now likely to back questionable Trump Fed pick
In a shift, the Senate Banking Committee is likely to back President Donald Trump’s unconventional nomination of Judy Shelton for the Federal Reserve’s Board of Governors in a party-line vote Tuesday
11:02AM ( 3 hours ago )
Federal agents, local streets: A 'red flag' in Oregon
The actions of federal law enforcement officers at protests in Oregon’s largest city are raising the prospect of a constitutional crisis
9:49AM ( 4 hours ago )
AP Online Congress News
The Latest: Jordan to reopen airports to tourists in August
The Jordanian government says it will begin reopening airports to international travelers in August after sealing its borders in March to help halt the spread of the coronavirus
1:54PM ( 53 minutes ago )
Banks, energy companies lead stocks higher on Wall Street
Banks and energy companies are leading stocks to broad gains on Wall Street in afternoon trading Tuesday, as the market extends its recent run of gains
1:45PM ( 1 hour ago )
Astronauts squeeze in last spacewalk before SpaceX departure
Astronauts are squeezing in one last spacewalk before turning their attention to the all-important end to SpaceX's first crew flight
1:16PM ( 1 hour ago )
AP Business
Stimulus package breaks new ground in European unity
The European Union has taken a big step toward deeper economic cooperation as they try to rescue the economy from the coronavirus
11:00AM ( 3 hours ago )
Poll: Pandemic hurting Americans' finances in disparate ways
As the coronavirus pandemic drags on, a new poll from NORC at the University of Chicago finds it's having different effects on Americans’ economic well-being
8:07AM ( 6 hours ago )
LinkedIn laying off nearly 1,000 amid hiring slowdown
Professional networking company LinkedIn is laying off nearly 1,000 employees, or approximately 6% of its global workforce, as a slowdown in hiring amid the coronavirus pandemic pressures its business
7:53AM ( 6 hours ago )
AP Business - Economy
Asia shares rise on vaccine hopes, tech rally on Wall Street
Asian shares are mostly higher on rising hopes for a vaccine to combat the coronavirus pandemic
2:44AM ( 12 hours ago )
Wrangling over virus relief persists despite high stakes
The race to corral the coronavirus pandemic is taking on even greater urgency as a burgeoning economic crisis collides with political turmoil
8:48PM ( 18 hours ago )
Rich Americans spew more carbon pollution at home than poor
A comprehensive study of American homes finds that on average rich people produce nearly 25% more heat-trapping gases than poorer residents
3:46PM ( 23 hours ago )
AP Business - Industries
Mnuchin urges swift aid bill; ex-Fed chairs want bigger deal
Treasury Secretary Steven Mnuchin is urging Congress to quickly enact a new pandemic relief package targeting hardest-hit swaths of the economy, as lawmakers race to stand up federal aid in the face of the latest spike in coronavirus cases across much of the Sun Belt and persistent severe unemployment
7:42PM ( 3 days ago )
Wall Street ticks up; S&P 500 nets 3rd straight weekly gain
Wall Street ended another wobbly day broadly higher, giving the S&P 500 its third straight weekly gain
4:33PM ( 3 days ago )
Former Fed officials urge more efforts to bolster economy
Former Federal Reserve Chairs Ben Bernanke and Janet Yellen have urged Congress to do more to help the economy deal with the devastating coronavirus pandemic
1:23PM ( 4 days ago )
AP Business - Financial Services
Sanger's name to be dropped from NYC clinic over eugenics
Planned Parenthood of Greater New York says it will remove the name of pioneering birth control advocate Margaret Sanger from its Manhattan health clinic because of her “harmful connections to the eugenics movement
2:28PM ( 19 minutes ago )
Trump excluding those in US illegally from reapportionment
President Donald Trump has signed a memorandum that seeks to bar people in the U.S. illegally from being counted in congressional reapportionment
2:27PM ( 20 minutes ago )
Trump show returns: President resuming virus briefings
President Donald Trump pulled the plug on his freewheeling daily coronavirus briefings when they turned into a political liability this spring
2:25PM ( 22 minutes ago )
Transgender official takes abuse while leading virus efforts
One of Pennsylvania's most popular fairs is apologizing after a dunk-tank promotion led to accusations of transphobia
2:20PM ( 27 minutes ago )
Ohio House speaker, 4 others arrested in $60M bribery case
The powerful Republican speaker of the Ohio House and four other people have been arrested in a $60 million federal bribery investigation
2:20PM ( 28 minutes ago )