Key GOP senators express worries over Trump nominee for the Fed

Key Republican senators expressed reservations over Judy Shelton’s nomination for an open seat at the Federal Reserve, despite efforts from President Donald Trump’s nominee to backtrack on some of her previous writings.

Shelton, a former economic adviser to Donald Trump, faced the Senate Banking Committee on Thursday and drew skepticism from some Republicans who were bothered by her stances on the gold standard and on foreign exchange dynamics.

Alabama’s Richard Shelby said he was “troubled” by some of Shelton’s writings and Pennsylvania Republican Pat Toomey disagreed with Shelton’s suggestion to devalue the dollar in response to global central banks lowering interest rates.

“I’m concerned about the extent to which you advocate for our monetary policy to be influenced and reactive to the foreign exchange behavior of other countries,” said Toomey. After the exchange, Toomey reportedly said he was unsure if he would ultimately support her nomination.

St. Louis Fed economist Christopher Waller, Trump’s other nominee, only fielded a few questions during the hearing.

Shelton, who had served in an appointed-role as executive director of the European Bank for Reconstruction and Development, has published several op-eds and two books in addition to serving on Trump’s transition team as an adviser. In response to a question from Alabama Democrat Doug Jones, Shelton described her ideas as “out-of-the-box.”

UNITED STATES - FEBRUARY 13: Judy Shelton and Christopher Waller, nominees to be members of the Board of Governors of the Federal Reserve System, testify during the Senate Banking, Housing, and Urban Affairs Committee confirmation hearing in Dirksen Building on Thursday, February 13, 2020. (Photo By Tom Williams/CQ-Roll Call, Inc via Getty Images)
UNITED STATES - FEBRUARY 13: Judy Shelton and Christopher Waller, nominees to be members of the Board of Governors of the Federal Reserve System, testify during the Senate Banking, Housing, and Urban Affairs Committee confirmation hearing in Dirksen Building on Thursday, February 13, 2020. (Photo By Tom Williams/CQ-Roll Call, Inc via Getty Images)

In August last year, she told CNBC that she would like to see the United States counter lower interest rates around the world with a weaker U.S. dollar. At the time, Trump was bashing the Fed for not lowering rates to take steam out of the strengthening dollar, arguing that a weaker dollar would help boost U.S. exports.

Toomey said her thoughts on devaluing the U.S. dollar were a “dangerous path to go down,” prompting Shelton to backtrack on the idea of lowering rates for the specific purposes of manipulating the dollar.

“It would be anathema for us to suggest we should devalue our money to gain a trade advantage,” Shelton said.

The Senate Banking Committee is comprised of 13 Republicans and 12 Democrats. Because nominees need a majority of the committee’s approval to advance to a full Senate vote, Shelton cannot afford to lose the support of more than one GOP senator in the committee.

Isaac Boltansky, an analyst with DC-based Compass Point, said GOP questioning “should worry the White House.”

Reversal on gold standard

In 2009, Shelton wrote an op-ed in The Wall Street Journal urging the U.S. to “go back to the gold standard,” alleging that inflation tolerated by the Fed is “the enemy of capitalism.”