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Senate Fails To Approve Judy Shelton's Nomination To Federal Reserve Board


Today the Senate failed to approve the controversial nomination of Judy Shelton to the powerful Federal Reserve Board of Governors. Shelton is an economist with some highly unorthodox views on monetary policy. The White House and the Senate are still holding out hope that she can be approved next week. NPR's Jim Zarroli is here with more.

Hi, Jim.


SHAPIRO: Tell us what happened in the Senate today to block her nomination.

ZARROLI: This was a defeat for Senate Majority Leader Mitch McConnell. He wanted to push through Judy Shelton's nomination in the lame-duck session, but Republicans couldn't get enough votes to approve her. The reason is that three Republicans have said they won't vote for her. That is Mitt Romney of Utah, Susan Collins of Maine and Lamar Alexander of Tennessee. Now, normally, the Senate would have enough votes to get her through anyway. But two senators have gone into quarantine because of exposure to COVID - Charles Grassley of Iowa and Rick Scott of Florida. So the Republicans don't have the votes at this point to overcome the opposition. And really, the fact that three Republicans are voting against Shelton is evidence of, you know, how far outside the mainstream she is.

SHAPIRO: What makes her so controversial? What are those unorthodox views she has?

ZARROLI: Well, she has a history of some pretty unusual statements. She's been a supporter of tying the value of the dollar to gold, which is pretty far outside the mainstream among economists. She's suggested the Fed should be less independent than it is. She even questioned the need for the Federal Reserve. And these are unorthodox views. She's also accused of being quite partisan. I mean, during the Obama administration, she criticized the Fed for keeping interest rates too low. Then President Trump took office and wanted the Fed to cut rates, and suddenly, she reversed course and said she wanted rates even lower.

So she's really been a lightning rod. Senator Ron Wyden, a Democrat of Oregon, says her ideas are so wacky and outdated that giving her authority over the dollar would be like putting a medieval barber in charge of the Centers for Disease Control.

SHAPIRO: Well, if she is approved, what kind of impact could she have on Fed policy?

ZARROLI: Well, I mean, she would sit on the Fed until - Fed Board of Governors - until 2024. She would be one of seven Fed governors. So she would have limited influence. She does have some support among certain conservative economists, but her views are really not widely shared, and I don't see them influencing the other Fed governors. However, the Fed does typically like to make decisions by consensus. It doesn't always happen, but they like to put on a united front. And Shelton at least, you know, has the potential to be a real outlier and at a critical time. I mean, the Fed is trying to manage the fallout from this terrible pandemic.

SHAPIRO: Well, what are the chances that Mitch McConnell comes back and tries again and the Senate approves her this time?

ZARROLI: It is possible. One thing that happened today is that McConnell switched his vote at the last minute, which gives him the option of coming back later and bringing the nomination up for another vote. The two senators who couldn't be there today are - they're not sick. They're in quarantine. So theoretically, they'll be able to return to the Senate maybe next week. But there is a problem for Republicans. Mark Kelly, a Democrat, won a special election for a Senate seat from Arizona. He will take office right after Thanksgiving. He's replacing a Republican, Martha McSally, so that would give McConnell one less vote in Shelton's favor. So the clock's ticking.

SHAPIRO: NPR's Jim Zarroli, thanks a lot for the update.

ZARROLI: You're welcome.

(SOUNDBITE OF IMOGEN HEAP SONG, "TIDAL") Transcript provided by NPR, Copyright NPR.

Jim Zarroli is an NPR correspondent based in New York. He covers economics and business news.