Risk & Compliance

Former Fed Officials Urge Senate to Reject Fed Nominee

The group said Judy Shelton was ‘incapable’ of leaving politics at the door.
Lauren MuskettAugust 21, 2020
Former Fed Officials Urge Senate to Reject Fed Nominee

Thirty-eight former Federal Reserve officials have called for the Senate to reject Judy Shelton’s nomination to the board of governors of the central bank, saying her policy positions were extreme and she posed a threat to the Fed’s independence.

“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 officials said, in an open letter. “Now, she appears to have jettisoned all of these positions to argue 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 signers of the letter all served on the staffs of either the Board of Governors or the Federal Reserve Banks. The highest-ranking is Alan Blinder, who served as vice chairman of the Fed board of governors from 1994 to 1996.

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Shelton was nominated in January by President Donald Trump amid opposition from economists and financial policy experts. Last month, her nomination advanced through the Senate Banking Committee in a party-line vote; however, all Senate Democrats are expected to oppose her appointment, while Republican Senators Mitt Romney and Susan Collins have also said they are opposed.

If confirmed, Shelton would be seen as a front-runner to replace Jerome Powell when his term expires in 2022, if President Trump is reelected.

“The Fed has serious work ahead of it. While we applaud the board having a diversity of viewpoints represented at its table, Ms. Shelton’s views are so extreme and ill-considered as to be an unnecessary distraction from the tasks at hand,” the letter said.

Critics have cited her support for a return to the gold standard and her skepticism of federal deposit insurance, but the former Fed officials said Shelton has abandoned her positions to argue Fed policies should be subordinate to the White House.

“The late Chairman Paul Volcker was noted for advising new governors that ‘when you enter this building, you leave your politics at the door,’” the letter said. “Sound advice that, from her record, Ms. Shelton is incapable of following.”

Tom Williams/CQ-Roll Call, Inc via Getty Images