Senate Takes First Step to Vote on Shelton Fed Confirmation
(Bloomberg) -- Judy Shelton’s nomination to the Federal Reserve Board of Governors gained new life on Thursday as Senate Majority Leader Mitch McConnell moved to set up a confirmation vote as early as next week, after a yearlong delay that raised doubts about whether she would be approved.
Shelton is one of two of President Donald Trump’s Fed nominees pending in the Senate. If she and Trump’s other pick, Christopher Waller, are confirmed, the outgoing president would have placed five of seven members on the U.S. central bank’s board. He also elevated Jerome Powell as chairman.
McConnell’s move to set up a procedural vote early next week was just for Shelton’s nomination. If no senator objects to Waller’s confirmation, he could be approved without a roll call vote.
Shelton was nominated 17 months ago, alongside Waller, and as recently as September she didn’t yet have enough support to win confirmation. She has drawn criticism for her past advocacy for the gold standard, her one-time opposition to federal deposit insurance and remarks calling into question the need for a central bank.
Lisa Murkowski, an Alaska Republican who had not previously announced her position, said Thursday that she would support Shelton.
“I’ve had plenty of time to look at it,” Murkowski said at the Capitol. “I’ve had an opportunity to talk to Judy Shelton and I’m going to be supporting her.”
Utah Republican Senator Mitt Romney on Thursday reiterated his opposition. He and Susan Collins are the only two of 53 Republicans in the Senate who have publicly opposed Shelton’s nomination. If all 47 Democrats vote against her, Shelton could only afford to lose one other GOP senator.
If either nomination fails to proceed in the lame duck session of the Senate, President-elect Joe Biden would be able to put forward fresh nominees next year.
The Senate Banking Committee advanced Shelton’s nomination on a party-line vote in July. Waller, research director at the Federal Reserve Bank of St. Louis, also was approved by the panel and is considered uncontroversial.
The action to move Shelton’s nomination forward in the next week was the result of a confluence of events, according to a person familiar with the discussions.
Democrat Mark Kelly likely will be seated later this month once Arizona certifies his win in a special election over Senator Martha McSally, a Republican, who was appointed after the death of John McCain. That will cut the Republican margin in the Senate by one vote.
There was also concern about leaving the seat for Biden to fill. The team of people he’s named to suggest nominees for financial agencies includes Gary Gensler, a former Commodity Futures Trading Commission chairman, and others who Republicans view as extreme liberals, according to the person. So the GOP is looking to keep in place as many of their own picks as possible.
Republicans had held back on a Shelton confirmation until now because some had feared that Trump might try to oust Powell and make her chairman, which would put some of her out-of-the-mainstream views on center stage. Biden’s victory eased that worry.
The procedural vote on Shelton’s nomination could happen as early as Tuesday but is more likely on Wednesday, according to a Senate Republican aide.
Fed spokeswoman Michelle Smith declined to comment.
Shelton has been a political loyalist to the president -- having worked as an informal adviser to his 2016 campaign. She appeared to abandon her advocacy for ultra-tight monetary policy when she emerged as a Fed candidate, publicly aligning herself with the president’s calls for lower interest rates.
A group of former Fed officials and staffers, including ex-Vice Chair Alan Blinder, published an open letter in late August calling on the Senate to reject Shelton’s nomination.
Oregon Senator Ron Wyden, the ranking Democrat on the Senate Finance Committee, said her views are “wacky and outdated.” He called McConnell’s sudden move to advance the nomination “an effort to sabotage what little economic recovery we have by installing an unqualified, political pick at the Federal Reserve.”
The power of an individual governor to influence monetary policy is limited, particularity if they are at odds with the leadership. The four-year term of Powell, who endured withering public criticism from Trump for raising interest rates earlier in his tenure, expires in February 2022. Biden will have the choice or renominating him or choosing someone else.
Trump previously advanced four other people to fill the two vacant board seats, all of whom failed to make it to confirmation.
His failed Fed choices have included people too partisan or unorthodox to garner enough support in the Senate, including the former Republican presidential candidate Herman Cain, who has since died, and Stephen Moore, an economist at the conservative Heritage Foundation who advised Trump’s 2016 campaign. Cain and Moore withdrew from consideration in the face of opposition from Senate Republicans.
The Senate also didn’t act in 2018 on the nominations of two more mainstream candidates, economists Nellie Liang and the late Marvin Goodfriend, who withdrew from consideration.
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