Amazingly, President Donald Trump has nominated someone for the Federal Reserve Board who once questioned whether the U.S. central bank should exist in the first place. In a 2009 Wall Street Journal article, Trump nominee Judy Shelton asked why “we need a central bank,” but more recently, the Republican-led Senate Banking Committee approved her nomination to the Federal Reserve Board and set it up for a vote by the full Senate. A second Republican Senator — Maine’s Susan Collins — has now announced their opposition to Shelton’s nomination and intent to vote against her if the nomination makes it to a full Senate vote. Utah’s Republican Senator Mitt Romney had previously announced his opposition to Shelton.
On Monday, Collins commented:
‘I have serious concerns about this nomination. In her past statements, Ms. Shelton has openly called for the Federal Reserve to be less independent of the political branches, and has even questioned the need for a central bank. This is not the right signal to send, particularly in the midst of the pandemic, and for that reason, I intend to vote against her nomination if it reaches the floor.’
In light of the current party distribution in the Senate, two more Republican Senators would have to announce their opposition to Shelton to block her nomination. It’s not unheard of — when Trump announced plans to nominate the inexperienced businessman Herman Cain to the same board, four Republican Senators announced their opposition, and Cain’s nomination did not go through.
At her nomination hearing for a seat on the Fed, Judy Shelton failed to explain how she would handle an economic crisis.
That hypothetical economic crisis is now a reality – but we STILL have no idea how Dr. Shelton would respond.
— Sherrod Brown (@SenSherrodBrown) July 21, 2020
Meanwhile, as Obama-era Treasury Department official Steven Rattner explained in a piece for The New York Times, Shelton’s ideas at the helm of the Federal Reserve Board amidst the earliest parts of the Coronavirus outbreak could have been disastrous. As Rattner explained:
‘Her view that interest rates should be “rules based” would have prevented the central bank’s emergency cuts. Her past opposition to the Fed buying bonds to help stimulate the economy — as it did successfully during the 2008 financial crisis — would have prevented the central bank from standing up many of the rescue programs that are now helping to keep the economy afloat. Her notion that the Fed must consult with Congress, rather than act independently… would have introduced damaging delays, politics and, likely, policy misfires as ill-equipped members of Congress tried to grapple with the intricacies of monetary policy.’
While opposing Shelton, Collins might be worrying about her own political prospects. Democratic Senate nominee Sara Gideon currently leads Collins in polls by an average of 2.5 percent.