After a contentious nomination hearing featuring criticism from Democrats and Republicans alike, speculation arose late Thursday that President Donald Trump might withdraw his nomination of Judy Shelton to the Federal Reserve board.
While the White House quickly denied the report, talk persisted into the evening that Shelton’s nomination would be pulled.
Senate Democrats are in agreement that Shelton, a conservative commentator, was too radical to be placed on the Fed board. They cited years of her writings favoring the gold standard and devaluation of the dollar as an acceptable goal of monetary policy.
Shelton tried to defend her record as a consistent, though out of the mainstream, view on monetary policy.
But time and again, Democrats pushed her on specifics that she has walked back since Trump was elected. Democrats then said she would do whatever the president tweeted.
The combative nature of the Senate Banking Committee hearing was clear from the outset, when Sen. Sherrod Brown, a Democrat from Ohio and the ranking minority member on the panel, said Shelton “doesn’t belong anywhere near” the central bank’s board.
Shelton has long advocated a return to some form of a gold standard.
“If we as a nation had followed Ms. Shelton’s advice and not advanced beyond the gold standard nearly a half-century ago, our nation would have bounced from boom to bust without the monetary tools to pull us out of recessions. Depressions would have been longer,” Brown said.
Brown said Shelton was “off the ideological spectrum.”
There are two vacancies on the Fed’s seven-member board of governors.
In questions from the committee, Shelton defended her writing, saying she had been “intellectually consistent” if not part of the “mainstream.”
She said she would work closely with her Fed colleagues and act to make sure the Fed was independent from political interference.
“I think the intellectual diversity would strengthen the discussion,” she said.
Trump has also nominated Christopher Waller, the director of research at the St. Louis Fed, to the Fed board. Waller’s nomination is not considered controversial.
There is heightened interest in the Shelton nomination because Trump is increasingly expected to pick a new chairman for the central bank if he is re-elected.
Trump has been harshly critical of Fed Chairman Jerome Powell, whom he picked to lead the central bank after opting not to extend the tenure of Janet Yellen.
Read: Preview of the Shelton hearing
In her recent writing, Shelton has focused on the dollar and perceived efforts by U.S. trading partners to keep their currencies weak to boost their economies. This has also been a favorite topic of the president’s. In recent tweets, he has urged the Fed to reduce its benchmark rate into negative territory to give the country a competitive trade advantage.
Democrats accused Shelton of playing politics with her economic views.
Sen. Chris Van Hollen, a Democrat from Maryland, recalled that Shelton was extremely critical of the increase in the national debt under President Barack Obama. But Shelton has been relatively silent about Trump’s corporate tax cut, which sharply boosted the national debt.
“The problem is you have a lot of writings of a very political nature. And now your responses today are totally inconsistent with the positions you have taken in the past. The only thing that has changed is who is in the White House,” Van Hollen said.
The best chance Democrats have to defeat Shelton is in the Banking Committee, where Republicans have a one-vote majority. Republicans have 53 votes on the Senate floor as compared with 47 votes for Democrats, including two independents.
Many Republican members of the committee have said in recent days that they will support Shelton.
Sen. Mike Crapo, a Republican from Idaho and the chairman of the committee, would provide a “different perspective” to the Fed.
Opinion: Which Judy Shelton will the Fed get?
But the trouble for Shelton came when some senior Republicans, while not outwardly opposing her, sounded as if they were still on the fence.
Sen. Pat Toomey, a Pennsylvania Republican, said he was troubled by Shelton’s frequent calls for the Fed to help lower the value of the dollar if foreign countries depreciated the value of their currencies.
“I think that is a very dangerous path to go down. This beggar-thy-neighbor mutual currency devaluation is not in our interest,” Toomey said.
Toomey told reporters outside the hearing that he had not made up his mind on Shelton’s nomination.
At the end of the hearing, Richard Shelby, the Republican from Alabama who has served on the Senate Banking Committee longer than any legislator in history, told reporters he was “concerned” about Shelton’s nomination.
Sen. John Kennedy, a Republican from Louisiana, was also lukewarm.
Crapo, who as the chairman of the committee could seek to sway undecided colleagues, defended Shelton when the hearing was completed. He said Shelton was “very solid” in her testimony in the face of “an orchestrated, calculated effort” to defeat her.
The committee has yet to set a date for a vote on the Shelton and Waller nominations.
According to a report by The Hill hours after the hearing had ended, a decision had been made to pull her nomination. The report quoted unidentified Senate Republican sources, including a senator.
But the White House swiftly denied the report.
“The nominations of Judy Shelton and Christopher Waller are not being pulled. Both were in front of the Banking Committee today and the White House expects both to be confirmed by the Senate to the Federal Reserve,” a spokesman said.
Compass Point Isaac Boltansky called Shelton’s fate “a coin toss.”
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