RPT: MNI INSIGHT: Fed Nominees Face Long Odds Despite Momentum

By Evan Ryser

     WASHINGTON (MNI) - President Donald Trump's Federal Reserve Board nominees

face a closing window as November elections near and Senate leaders maintain a

skeptical view of the pair, MNI understands.

     Former Senate Banking Committee aides indicate that Fed nominees

Christopher Waller and Judy Shelton need to be passed as a pair if at all.

     "They will rise and fall together," said a former Republican Senate Banking

Committee aide familiar with the process, who declined to be identified by name

over sensitive ongoing discussions.

     While chances of getting through the Senate Banking Committee are getting

better, the former aide said, there is less than a 50/50 chance for the nominees

to pass the full Senate and it won't take much for the nominations to die a slow

death as elections approach.

     "Even if they get through the Committee, they will have a hard time getting

through the full Senate. There is not a huge demand," the former Republican aide

said.

     The White House has spread the message that Waller's confirmation depends

on seeing Shelton's nomination. At the same time, Waller had "bumps" in meetings

with Senators, due to Waller's vision of supervision and regulation that may not

be in keeping with Vice Chair Randal Quarles' vision, largely supported by

Republicans on the Senate committee.

     Graham Steele, former chief counsel for the Senate Banking Committee, said

marginal objections on the committee will probably fall by the wayside when put

to a vote, but the "full Senate is more of an open question."

     While Republican Senators have objections, "it is more signaling some kind

of independence to provide themselves cover, but by all indications they'll at

least get out of committee," Steele said.

     "It's a possibility that the nominees could hang out there for a while,"

Steele said.

     "It's either going to happen this summer, or it's not going to happen at

all. Things tend to shut down in election years at some point in late June,"

Steele said.

     Senator Patrick Toomey, Republican of Pennsylvania, had voiced concern

about Shelton but changed his mind later last month. 

     Senator Shelby remains undecided, according to his office, and Senator

Kennedy remains undecided on Shelton and plans to meet with her this week,

according to an aide.

     The nominees need a simple majority vote by the Banking Committee to move

onto confirmation by the full Senate, meaning opposition by only one Republican

on the panel could dash her chances of moving forward. The committee has 13

Republicans and 12 Democrats.

     The Senate Banking Committee, which has jurisdiction over Fed nominees, has

not yet scheduled a vote, according to a spokeswoman. The delay or failure

around filling Fed board vacancies comes at a critical time with the central

bank having made an unscheduled rate cut for the first time since the Great

Recession as the coronavirus threatens supply chains and consumer confidence. 

     Sarah Binder, a political science professor at George Washington

University, said the influence of the nominees largely depends on whether and

what sorts of allies a single governor might have. "Governors don't have much

staff help on the Board - the research apparatus essentially works for the

chair."

     President Trump has seen four nominations fail including Herman Cain and

Stephen Moore, but also more conventional nominees including former Carnegie

Mellon economics professor Marvin Goodfriend and longtime Fed official Nellie

Liang now at the Brookings Institution.

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

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