By Nick Timiraos 

The Senate Banking Committee said Friday it would vote on the nomination of two of President Trump's selections for the Federal Reserve later this month.

The announcement suggests that Republicans, who have a one-vote advantage on the panel, are prepared to advance the candidacy of Judy Shelton, an economic adviser to Mr. Trump during the 2016 campaign whose heterodox policy views led to some resistance from GOP senators at her Feb. 13 confirmation hearing.

If the committee approves of Ms. Shelton and a second nominee, St. Louis Fed economist Christopher Waller, they would await a full Senate vote before joining the central bank's board. The committee vote is slated for July 21.

All 12 of the Democrats on the banking panel signed a letter to the committee's chairman, Sen. Mike Crapo (R., Idaho), asking for a new hearing, given how dramatically the coronavirus pandemic has altered the economic outlook since Ms. Shelton's confirmation hearing this winter.

The Fed's seven-member board has played an especially important role responding to the coronavirus pandemic. The larger Federal Open Market Committee, which includes the governors plus five regional bank presidents, votes on interest rate decisions. But it is the board that decides on the emergency-lending programs the Fed has established to extend credit to companies, cities and states since the coronavirus seized up financial markets in March.

Two Republicans on the panel had raised doubts after the February hearing about Ms. Shelton's candidacy, but later said they were prepared to support her nomination.

A third Republican remained undecided. "Nobody wants anybody on the Federal Reserve that has a fatal attraction to nutty ideas," said Sen. John Kennedy of Louisiana after the hearing. "Now I'm not saying that's the case here, but that was sort of the dialectic going on."

Mr. Kennedy had pressed Ms. Shelton at the hearing to respond to a hypothetical scenario in which the economy slowed sharply and the unemployment rate jumped to 6.5%,from its reading at the time of 3.5%. Ms. Shelton was initially hesitant to provide specifics, prompting Mr. Kennedy to press for a more prescriptive answer.

"First, I would make it clear that there are limits to monetary policy," she said, adding that she would purchase government bonds and other safe assets to stimulate growth "very reluctantly."

In their letter Friday, Democrats cited the exchange in asking for another hearing. "We are now in an economic crisis worse than the one Dr. Shelton was asked about at her confirmation hearing," they wrote. "Based on her answers at the hearing, we are deeply concerned that the situation we are in today would have been worse if Dr. Shelton were already sitting on the Board of Governors."

Write to Nick Timiraos at


(END) Dow Jones Newswires

July 10, 2020 16:57 ET (20:57 GMT)

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