Trump Fed nom­i­nee faces skep­ti­cism at hear­ing

Richmond Times-Dispatch - - BUSINESS - BY CHRISTO­PHER RU­GABER

One of Pres­i­dent Don­ald Trump’s nom­i­nees for the Federal Re­serve came un­der sharp ques­tion­ing Thurs­day from sen­a­tors over her un­ortho­dox eco­nomic views, in­clud­ing from two Repub­li­cans whose doubts about her nom­i­na­tion could im­peril it.

The nom­i­nee, Judy Shel­ton, sought to make her un­con­ven­tional views an as­set by promis­ing to bring “in­tel­lec­tual di­ver­sity” to the Fed. Shel­ton has pre­vi­ously ex­pressed sup­port for a wide range of out-of-the-main­stream per­spec­tives, in­clud­ing ty­ing the dol­lar’s value to gold. She has also raised con­cerns among econ­o­mists and Fed watch­ers by ques­tion­ing the need for the central bank’s in­de­pen­dence.

Af­ter the hear­ing, two key Repub­li­cans — Sens. Pat Toomey of Penn­syl­va­nia and Richard Shelby of Alabama — re­it­er­ated their mis­giv­ings about her nom­i­na­tion. A third, Sen. John Kennedy of Louisiana, said he was un­de­cided.

With three Repub­li­cans lean­ing against her or un­de­cided, Shel­ton’s nom­i­na­tion is at risk of re­main­ing stuck in the Bank­ing Com­mit­tee. She would need all the Repub­li­can votes on the com­mit­tee to rec­om­mend her nom­i­na­tion to the full Se­nate. The com­mit­tee has a slim Repub­li­can ma­jor­ity of 13 to 12. Repub­li­cans also con­trol the Se­nate.

Dur­ing the hear­ing, Toomey crit­i­cized Shel­ton’s view that the Fed should con­sider act­ing to lower the value of the dol­lar if other na­tions ap­peared to be ma­nip­u­lat­ing their own cur­ren­cies.

“I think that’s a very, very dan­ger­ous path to go down,” Toomey said. “It’s not in the Fed’s man­date.”

Econ­o­mists gen­er­ally con­sider such poli­cies, some­times called “beg­gar thy neigh­bor,” as risky and in­ef­fec­tive. Toomey later told re­porters that Shel­ton’s answers failed to sat­isfy his con­cerns.

In the af­ter­math of his im­peach­ment trial, Trump has ap­peared em­bold­ened to con­front Repub­li­cans who op­pose his poli­cies or nom­i­nees for federal po­si­tions. In an­swer to a ques­tion Thurs­day, though, Toomey said he wasn’t con­cerned about op­pos­ing a Trump nom­i­nee if he or she were “un­suit­able.”

Like­wise, Shelby told Shel­ton, “I do have trou­ble with some of your writ­ings and some of your ar­ti­cles.” Af­ter the hear­ing, the Alabama sen­a­tor said he was still “con­cerned.” Shelby is a for­mer chair­man of the Bank­ing Com­mit­tee who re­cently be­came its long­est-serv­ing mem­ber.

Democrats on the com­mit­tee high­lighted Shel­ton’s pre­vi­ous crit­i­cism of the Fed for cut­ting in­ter­est rates to nearly zero in the af­ter­math of the Great Re­ces­sion, which it did amid a global fi­nan­cial cri­sis and soar­ing un­em­ploy­ment rate. Democrats noted that Shel­ton, like Trump, has re­versed her­self and now sup­ports lower rates de­spite a much more ro­bust econ­omy.

“Ms. Shel­ton has too many alarm­ing ideas and has flip-flopped on too many im­por­tant is­sues to have this job,” said Sen. Sher­rod Brown of Ohio, the top Demo­crat on the com­mit­tee.

Shel­ton also said she now strongly sup­ports gov­ern­ment in­sur­ance for bank de­posits — a key pillar of the U.S. bank­ing sys­tem since the Great De­pres­sion — even though she had ques­tioned the value of such in­sur­ance in a 1994 book.

Shel­ton

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