The candidate for the Federal Reserve Board of Directors nominated by Republican President Donald Trump was blocked in a key procedural vote in the Senate on the 17th and failed to enter the final approval stage.
Judy Shelton, who was nominated, is critical of the current Fed policy. This nomination was opposed by many Fed officials, Nobel Prize winners and other economists.
The Senate held a “termination of debate” vote on the nomination on the 17th. The Republican and Democratic parties hold 53 and 47 seats in the Senate respectively. The nomination was expected to enter the approval stage.
However, Chuck Grassley, the 87-year-old Senate Pro Temporary and veteran Republican, worked from home because of the coronavirus, and was absent to vote for the first time in 27 years. Another Republican, Rick Scott, is still in isolation and did not participate in the vote. Susan Collins and Mitt Romney “against the water” and voted against… As a result, the negative vote reached 50 votes, and the debate on Shelton’s nomination could not be stopped.
Reuters and many other media analyzed that the Republican Party can seek to vote again, and success depends on the timing. Lamar Alexander, another Republican who is openly opposed to Shelton, is not in Washington this week and is expected to return next week. Democratic candidate Mark Kelly of Arizona is waiting for confirmation of the by-election results on the 30th of this month. If he wins the election, he is expected to join Congress in early December.
According to the Associated Press, with the negative votes of Alexander and Kelly, unless McConnell pushes for another vote this week, even if Grassley and Scott return after the 14-day quarantine period, the Republicans seem to be unable to get into the final. Yes votes at the nomination approval stage.
Shelton is 66 years old and is a conservative economic commentator. He served as an economic adviser to Trump’s 2016 campaign and previously served as director of US affairs at the European Bank for Reconstruction and Development. She supports the United States to restore the gold standard that was abolished in 1971, that is, to re-measure the value of the U.S. dollar with gold to maintain exchange rate stability. This view is regarded by most economists as “unrealistic” and “outdated”, and may compress the Fed’s interest rate policy adjustment space.
Shelton also publicly questioned the political independence of the Federal Reserve. In the eyes of supporters, letting Shelton, who “breaks the rules” join the Fed, is expected to subvert the Fed’s current “collective thinking” decision-making mechanism. Opponents believe that Shelton’s lack of understanding of the financial system makes her “unconsidered” as a Fed governor.
Some Senate Democrats also pointed out that Sheldon’s views were repeated during the time when the Democratic and Republican parties took turns in power. During the tenure of former President Barack Obama, she opposed ultra-low interest rates; after Trump took office, she turned to support near-zero interest rates and called on the Fed to cut interest rates. Senate Democratic leader Chuck Schumer said that Shelton has presented herself as “an economic weather vane, pointing in any direction she thinks the partisan wind is blowing.”
70 former Fed officials and employees and more than 100 American economists, including seven Nobel laureates, issued open letters earlier this year opposing Shelton’s appointment as a Fed governor. However, Senate Democratic leader Chuck Schumer said late on the 17th that he believed that Shelton’s nomination would eventually be approved.
The Federal Reserve has established 7 directors in accordance with the law, and currently there are 5 directors, of which only one is not nominated by Trump.