More than two dozen former Federal Reserve officials wrote a letter to the Senate urging its members to reject Judy Shelton, President Donald Trump’s nominee to one of the empty seats on the Fed’s Board of Governors.
The letter cites the important role played by the Fed during the COVID-19 pandemic, including its decision to resurrect a 2008 bond-buying program that restored liquidity to mortgage markets and drove interest rates to a series of new record lows.
“The Federal Reserve is a vital part of our government and has been particularly important during our current crisis,” the letter said. “The Fed’s quick action to provide the markets with the necessary liquidity was crucial to restoring order to those markets and ensuring that the economic crisis that we are enduring did not become much, much worse. However, like the pandemic, the economic challenges persist.”
Last month, the Senate Banking Committee narrowly approved Shelton in a party-line vote. The nomination now goes to the full Senate for a vote. Shelton’s confirmation would be blocked if four Republicans vote against her and Democrats remain unified in their opposition.
Two GOP senators, Mitt Romney (R-UT) and Susan Collins (R-ME), have said they will vote against Shelton, and Lisa Murkowski (R-AK) has said she is undecided.
The letter was signed by Alan Blinder, former vice-chairman of the Fed Board of Governors, Cathy Minehan, former president of the Federal Reserve Bank of Boston; Gary Stern, former president of the Federal Reserve Bank of Minneapolis, and more than 30 other former Fed officials who served under Republican and Democratic administrations.
“Ms. Shelton has a decades-long record of writings and statements that call into question her fitness for a spot on the Fed’s Board of Governors,” the letter said. “She has advocated for a return to the gold standard; she has questioned the need for federal deposit insurance; she has even questioned the need for a central bank at all.”
The letter also highlighted Shelton’s belief that the Fed should coordinate policy with the White House. After Trump nominated her last year, Shelton advocated in a Wall Street Journal column for policy coordination between the Fed and the Trump administration, which would break a decades-long tradition of Fed independence.
Shelton has argued “for subordination of the Fed’s policies to the White House – at least as long as the White House is occupied by a president who agrees with her political views,” the letter said.
The letter cited Fed Chairman Paul Volcker, who died in December, as advising new governors that “when you enter this building, you leave your politics at the door.”
It was “sound advice that, from her record, Ms. Shelton is incapable of following,” the letter to the Senate said.
Senate Leader Mitch McConnell has not scheduled a vote for Shelton or fellow nominee Christopher Waller, research director at the Federal Reserve Bank of St. Louis, who received broad support from both Democrats and Republicans in the committee vote.