Judy Shelton, the controversial Federal Reserve nominee who long advocated for a return to the gold standard and once questioned the basis for the Fed’s independence from political influence, is one step closer to a seat on the central bank’s board.
Shelton, whose nomination by President Donald Trump has faced months of delays because of skepticism from key Republicans, was approved Tuesday by the Senate Banking Committee on a party-line vote. She must now face a vote before the full chamber.
“I am confident that her deep understanding of the Fed’s monetary policy toolkit, monetary history and commitment to maintaining Fed independence will serve the Fed well,” Banking Chair Mike Crapo (R-Idaho) said before the committee vote.
Democrats have decried Trump’s selection of Shelton not only because of her unorthodox views — she also once suggested ending federal deposit insurance for banks — but also because her stances have seemingly shifted since she became a candidate for the job, moving more in line with the president’s vocal opinions about the Fed.
She has had a decades-long affinity for tying the value of the dollar to gold, but she has been downplaying that since she was nominated. She slammed low interest rates for years, but now she supports Trump’s view that rates should be at zero. And she has abandoned her view that the central bank shouldn’t try to cater to financial markets.
Shelton, an author with a PhD in business administration, has also cast doubt on the need for the central bank to operate without influence from politicians, a design feature that was aimed at encouraging the Fed to act in the long-term interest of the economy rather than to boost incumbents’ re-election prospects.
She later endorsed Fed independence during her nomination hearing.
For some of these reasons, Shelton at her confirmation hearing faced tough questioning from Republican Sens. Pat Toomey of Pennsylvania, Richard Shelby of Alabama and John Kennedy of Louisiana. All three were undecided after her performance but voted for her today.
Economists across the ideological spectrum have also expressed doubts about Shelton’s fitness for the job.
If she is confirmed alongside fellow nominee Christopher Waller, who was approved in committee by a 18-7 vote, she will be one of seven members of the Fed’s board, with a vote on interest rate policy as well as bank regulations.
Sen. Sherrod Brown (D-Ohio) said he was voting against Waller, a St. Louis Fed economist, because he was “concerned that he will not do the job of holding the biggest U.S. and foreign banks accountable if he is confirmed.”
Democrats Jon Tester of Montana, Mark Warner of Virginia, Catherine Cortez Masto of Nevada, Doug Jones of Alabama and Kyrsten Sinema of Arizona all voted in favor of Waller.
If Trump were to lose reelection, Shelton and Waller’s confirmations would leave no empty seats at the Fed for the new president to immediately fill. Should Trump win, critics have raised fears that he might nominate Shelton as Fed chair when Jerome Powell’s term as chief ends in 2022.
Trump has repeatedly blasted Powell on Twitter — including on personal terms — for not doing enough to boost the economy, but he has lately praised his performance during the pandemic-induced recession, during which the Fed has pledged trillions of dollars to support the markets.
Fed board seats are designed to turn over on a staggered schedule, so Shelton’s term would end in January 2024, while Waller’s term would last until 2030.