Central Banks

Friday, January 17, 2020 - 08:34

MNI POLICY: White House Sends 2 Fed Nominees To Senate


By Evan Ryser

WASHINGTON (MNI) - President Donald Trump is sending long-delayed Federal Reserve Board of Governors nominations of Judy Shelton and Christopher Waller to the Senate for confirmation, according to an announcement from the White House on Thursday.

Shelton, a former adviser to President Trump's 2016 presidential bid and controversial economist who most recently served as the U.S. executive director at the European Bank for Reconstruction and Development, and Waller, the research director and executive vice president of the St. Louis Fed, were originally named as potential nominees by Trump in early July in the form of a tweet.

Shelton has been nominated to a term expiring in Jan. 2024 and Waller to a term expiring in Jan. 2030.

Shelton has previously questioned the Fed's dual mandate to maximize employment and achieve low and stable prices. She has also publicly discussed returning the U.S. to the gold standard, a move that many mainstream economists and voting senators believe would damage the economy and handcuff the Fed in the event of a recession or other crisis.

After being nominated by the President, each potential Fed governor heads to the Senate, where the Banking Committee schedules and holds a confirmation hearing before going to the full Senate where a simple majority vote is need for confirmation.

Since the start of his presidency, Trump has moved to reshape the world's most powerful central bank, already appointing four of the current five seats on the Board, including Chair Jerome Powell, Vice Chair Richard Clarida, and Governors Randal Quarles and Michelle Bowman.

Trump's wide berth to reshape the central bank has so far seen a collection of comparatively mainstream economists and centrist Republicans at the urging of advisers such as Treasury Secretary Steven Mnuchin.

Trump, however, has recently had a string of failed Fed nominees.

Trump nominated Marvin Goodfriend in November 2017 but the conservative economist's nomination failed to win support in the Senate among Democrats, and when Republicans broke ranks with Trump the nomination was put on shaky ground. It eventually lapsed without a full Senate vote.

Nellie Liang, who worked at the Fed as a research economist and directed the Office of Financial Stability, was nominated in September 2018. Liang withdrew herself as a nominee in January 2019, after months passed without the full Republican-led Senate granting her a hearing.

Trump has since considered more fringe figures, showing support for Stephen Moore and, later, Herman Cain, a former pizza executive who dropped his bid for the 2012 Republican presidential nomination amid sexual harassment allegations.

Both Cain and Moore later withdrew their names from the nomination process after it became clear confirmation in the Senate was in doubt over their backgrounds and qualifications.

--MNI Washington Bureau; +1 202 371 2121; email: evan.ryser@marketnews.com

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