Senate banking chair defends Fed nominee as she clears first vote

The chairman of the Senate banking committee sought to fend off criticism that Judy Shelton, Donald Trump’s pick for a seat on the Federal Reserve board, held extreme views and lacked independence, as her nomination advanced past a key hurdle in the Senate on Tuesday.

“I am confident that her deep understanding of the Fed’s monetary policy toolkit, monetary history and commitment to maintaining Fed independence will serve the Fed well in its ongoing efforts to stabilise markets, and toward its mission of price stability and full employment,” Mike Crapo said in a statement.

The Senate banking committee on Tuesday approved Ms Shelton’s nomination by a party-line vote of 13 to 12, with Democrats opposed to her selection for the Fed job.

The final green light for Ms Shelton, who recently served as US representative at the European Bank for Reconstruction and Development in London, will come with a vote on the floor of the entire US Senate. It is unclear when Mitch McConnell, the Senate majority leader, will schedule one.

Ms Shelton’s nomination by Mr Trump has been controversial from the start, given her history of advocating for a return to the gold standard. It has triggered criticism that her views are outside the economic mainstream. Her loyalty to Mr Trump has also led many economists to question whether she would simply follow the president’s wishes on monetary policy, rather than be independent.

Even some Republican senators on the banking committee had been undecided on whether to endorse her nomination, particularly John Kennedy, a Louisiana lawmaker, Richard Shelby of Alabama and Pat Toomey of Pennsylvania.

They all ultimately decided to back her. But their reticence raises the prospect that other Republicans could defect at the final Senate vote, which Mr Crapo is attempting to prevent.

Despite her history as a harsh critic of the Fed, Ms Shelton has sought to project more moderate positions in recent months, including supporting the emergency actions taken by the central bank to address the Covid-19 crisis.

Her nomination for a seat on the Fed board was paired with that of Christopher Waller, a senior economist at the St Louis Fed, who was approved by a vote of 18 to 7 by the banking committee.

“Four of the five current Fed governors were nominated by President Trump, and each has demonstrated a willingness to take dramatic steps to stabilise markets and be independent of political pressure, and I have no doubt that Dr Shelton and Dr Waller will do the same,” Mr Crapo said.