The letter to the Committee Chair maintains that a second hearing is necessary to address concerns about the nominee’s ability to "handle the economic fallout" of COVID-19.
In their joint letter to Sen. Mike Crapo (R-Idaho), Chairman of the Senate Committee on Banking, Housing and Urban Affairs, Sen. Sherrod Brown (D-Ohio), Ranking Member of the Committee, and all other Democratic committee members are urging Crapo to "hold another hearing on Dr. Judy Shelton’s nomination for the Board of Governors of the Federal Reserve before moving her nomination forward." Although an upcoming Senate Banking Committee executive session is scheduled for a vote on July 21st for the nominations of both Dr. Shelton and Dr. Christopher Waller to become members of the Fed, the Committee Democrats contend that another hearing for Dr. Shelton is necessary because, from their perspective, Shelton’s prior testimony before the Committee raised "serious concerns" about her ability to "handle an economic crisis, like the one we are currently facing," and the "Congress and the American people need answers" before the Committee votes on her nomination.
In July 2019, President Donald Trump announced his intention to nominate Dr. Shelton to become a Fed governor (see Banking and Finance Law Daily, July 3, 2019). In February 2020, Sen. Elizabeth Warren (D-Mass) expressed her concerns about the nomination of Dr. Shelton and asked the nominee to explain a "number of inaccurate, radical and contradictory statements suggesting a lack of economic expertise and political independence" (see Banking and Finance Law Daily, Feb. 3, 2020). After Shelton’s testimony before the Senate Banking Committee later in February, Brown and others expressed their concerns about her ideological views (see Banking and Finance Law Daily, Feb. 14, 2020).
Letter highlights. Against this backdrop, the Senate Banking Committee Democrats’ July 10, 2020, letter to Crapo states that their deep concerns about Dr. Shelton’s nomination "are compounded during this unprecedented health and economic crisis." Among other things, the letter maintains that:
- while the Fed’s "independence and stability is absolutely critical to our economic recovery," Dr. Shelton "has advocated for failed Great Depression-era policies—like a return to the gold standard and the removal of deposit insurance—that would make our economy more volatile";
- Dr. Shelton’s statements at the February 2020 hearing indicate that she is "unprepared to handle an economic crisis" because, for example, when asked what she would do in response to "an economic crisis where consumer confidence and spending drops," and "unemployment jumps" amidst a recession, "Dr. Shelton could not provide a substantive and coherent answer";
- at the Committee hearing, Shelton failed "to describe —even in the most general of terms—what tools the Federal Reserve possesses, which tools it should use, or whether the United States should engage in stimulus spending"; and
- the "situation we are in today would have been worse if Dr. Shelton were already sitting on the Board of Governors."
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