Trump Fed nominee Shelton faces sharp questioning
WASHINGTON (Reuters) - Federal Reserve board nominee Judy Shelton on Thursday faced sharp questioning from Senate Banking Committee members who challenged her independence from President Donald Trump and characterized her thinking about money and economics as far outside the mainstream.
Over the course of the hearing she found herself having to back away from her prior views, explain that she was not pursuing a common North American currency with Canada and Mexico and even apologize for comparing a currency forger’s challenge of the Federal govenrment’s dominance over money to civil rights pioneer Rosa Parks’ challenge of segregation laws.
“I apologize for the comparison. I truly do,” Shelton said of an incident raised by Alabama Democratic Sen. Doug Jones in which a North Carolina man issued millions of dollars of his own precious-metal backed currency. “I believe he was testing the idea” that money needed to be backed by gold and silver.
“Is that something you want to test?” Jones shot back, summing up committee concerns about past Shelton writings seeming to support a return to something like a gold or other asset-backed standard for the dollar.
“No, senator,” Shelton said.
As the hearing progressed, at least one Republican committee member expressed similar doubts about Shelton. Pennsylvania Republican Sen. Patrick Toomey called her views about using the Fed to manage the value of the dollar against other currencies “a very very dangerous path to go down.”
Trump has often blamed the Fed for a rising dollar, which he argues has hurt exports. Shelton has often written about the need for a “sound” dollar.
Shelton, who holds a doctorate in business administration and has been sharply critical of the Federal Reserve in her writings and commentary, pledged broadly that she would be an independent thinker who would work well with existing Fed officials.
“I pledge to be independent in my decision-making and frankly no one tells me what to do,” Shelton said, deflecting questions about her past writings that, for example, characterized the Fed’s setting of a short-term interest rate as similar to Soviet central planning.
But Senate Democrats said flatly that they do not trust her.
“Shelton has flip-flopped on too many issues to be confirmed,” said Ohio Democratic Sen. Sherrod Brown. “She is far outside the mainstream. She is outside the ideological spectrum.”
A second nominee, Christopher Waller, a career economist who is currently the research director of the St. Louis Federal Reserve, faced few questions about his views.
Both were nominated by Trump to fill vacant seats on the Federal Reserve’s Board of Governors. He has blamed the Fed for holding back economic growth by not lowering interest rates far or quickly enough, and his two picks are seen as part of an effort to shape monetary policy more to his liking.
Both Waller and Shelton released opening statements on Wednesday ahead of their hearings that offered few clues about their views on monetary policy beyond promising to promote policies that support financial stability and help the Fed meet its goals of full employment and price stability.
The two emphasized the Fed’s accountability to Congress, which oversees the central bank. They must be confirmed by the Senate.
Waller, however, leaned harder on the notion of Fed independence, noting he had studied the subject as an academic before joining the central bank. He also noted the time he had spent with citizens outside of banking and financial circles in the Midwestern region where he works discussing how Fed policy affects them, adding that the input he received “affected how I thought about policy and its consequences.”
Shelton, a frequent critic of the Fed who since her nomination has expressed support for lower rates, did not repeat that view in her statement.
“I hope to contribute intellectual diversity as a Governor and would work collegially to promote sound money and sound finances,” she said.
The phrase “sound money” is often associated with the gold standard or some other system linking the dollar to the value of goods.
Additional reporting by Ann Saphir in San Francisco; Editing by Chizu Nomiyama and Dan Grebler