How GOP Gains May Af­fect Pres­i­dent’s Fed Nom­i­nees

The Bond Buyer - - Market News - — Gary E. Siegel

Repub­li­can gains in the Se­nate may al­ter the fate of at least one of Pres­i­dent Trump’s nom­i­nees for the Fed­eral Re­serve.

The Se­nate has sched­uled a Nov. 14 pro­ce­dural vote on Michelle Bowman, the Kansas State Bank Com­mis­sioner, who tes­ti­fied be­fore the Se­nate Bank­ing Com­mit­tee in May, and whose nom­i­na­tion was ap­proved by that panel in June. She was not voted on by the full Se­nate in Au­gust when Richard Clar­ida was con­firmed.

“Bowman cleared the Se­nate Bank­ing Com­mit­tee by a wide enough mar­gin to as­sume that her con­fir­ma­tion is just a mat­ter of tim­ing and prob­a­bly not al­tered by the midterm re­sults,” ac­cord­ing to Gary Pze­geo is head of fixed in­come at CIBC Pri­vate Wealth Man­age­ment. The fate of nom­i­nee Marvin Good­friend may be aided by ad­di­tional Repub­li­cans in the Se­nate, he said.

Good­friend’s Fe­bru­ary tes­ti­mony be­fore the bank­ing panel was con­tentious and although the panel nar­rowly ap­proved him, Sen. Rand Paul op­poses the nom­i­na­tion. “An ex­pan­sion of the Se­nate ma­jor­ity by 2-3 votes prob­a­bly re­duces Paul’s lever­age and in­creases the odds of a Good­friend con­fir­ma­tion,” Pze­geo said.

Of course, that as­sumes no ac­tion is taken be­fore the ses­sion ends and Pres­i­dent Trump renom­i­nates Good­friend.

Mickey Levy, man­ag­ing direc­tor at Beren­berg Cap­i­tal mar­kets, said the prob­a­bil­ity of the Se­nate con­firm­ing “Good­friend is rel­a­tively low. Too bad, he is ex­tra­or­di­nary.”

Luke Til­ley, chief econ­o­mist of Wilm­ing­ton Trust, agreed. “We don’t think the elec­tion will have a sig­nif­i­cant im­pact on the cur­rent Fed nom­i­nees and their like­li­hood for con­fir­ma­tion,” he said. “Clearly there will be some mem­ber­ship changes to the Se­nate Bank­ing com­mit­tee,” but “[w]e don’t ex­pect there to be a ma­jor shift in the pri­or­i­ties or the tone from ei­ther party’s rep­re­sen­ta­tion on the com­mit­tee.”

For­mer Fed­eral Re­serve econ­o­mist Nel­lie Liang is the fi­nal nom­i­nee, cho­sen by Trump in Septem­ber. Some Repub­li­cans in­clud­ing Pat Toomey of Penn­syl­va­nia and Thom Til­lis of North Carolina have raised con­cerns about her opinions on fi­nan­cial reg­u­la­tion.

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