38 Fed Alumni Reject Shelton Nomination In Open Letter

A coalition consisting of more than three dozen US central bank alumni and staff, as well as previous Vice Chairman Alan Blinder, wrote an open letter urging the Senate to block President Trump’s pick for the Federal Reserve’s Board of Governors.

The president nominated Judy Shelton in January, even as financial policy experts and analysts raised broad criticism. During the 2016 presidential race, Shelton worked unofficially as a Trump campaign advisor. If she is confirmed, she would be one of seven board members to vote on central bank regulatory policy and one of 14 on monetary policy.

Those who disapprove of Shelton believe she is unqualified for the role, citing her history of advocating for the gold standard, erratic stances toward monetary policy, and doubts of the central bank’s need to act as an independent body. 

Additionally, her staunch support for the president’s economic platform makes her a possible competitor to succeed the sitting chairman Jerome Powell, whose term ends in 2022. Many fear her loyalty to the president will influence her decision making and prevent her from remaining unbiased.

After the president nominated Shelton, Bloomberg reporters noted she seemed to drop her support for a stringent monetary policy and shifted her views closer to President Trump’s push for reduced interest rates.

The letter, which former Fed members released on Thursday, read, “The Fed has serious work ahead of it. While we applaud the Board having a diversity of viewpoints represented at its table, Ms. Shelton’s views are so extreme and ill-considered as to be an unnecessary distraction from the tasks at hand.”

The authors added, “Ms. Shelton has a decades-long record of writings and statements that call into question her fitness for a spot on the Fed’s Board of Governors. Now, she appears to have jettisoned all of these positions to argue for subordination of the Fed’s policies to the White House — at least as long as the White House is occupied by a president who agrees with her political views.”

Even though several Senate Republicans raised concerns and the confirmation hearing was anything but amicable, Shelton’s appointment received the Senate Banking Committee’s endorsement for a complete Senate approval. Those who support Shelton contend she offers a new outlook to the Fed, which many have ridiculed as an echo chamber. 

Currently, Shelton’s confirmation is anticipating a vote by the entire Senate. She still has a tough road ahead of her, mainly since every member of the Senate Democratic Conference is predicted to disapprove of her candidacy. Two Republican Senators — Mitt Romney of Utah and Susan Collins of Maine — have publicly stated their decision against Shelton, and Alaskan Senator Lisa Murkowski, a Republican, remains uncertain. 

Unless four Republicans and the entire Democratic party vote against Shelton’s confirmation, she will be confirmed. 

Former Boston Fed President Cathy Minehan, former Minneapolis Fed President Gary Stern, former director of the division of monetary affairs William English, and former director of the division of international finance Edwin Truman were among the letter’s other leading signatories.

 

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