President Donald Trump’s year-long effort to install Judy Shelton at the Federal Reserve fell short on Tuesday, as COVID quarantines and a lack of GOP support sank her nomination.
The U.S. Senate failed to confirm the former Trump transition economic adviser in a 47-50 vote, derailing the president’s bid to reshape the central bank before his expected departure. Trump nominated Shelton for the position in January.
Shelton’s nomination collapsed in part due to a lack of crucial Republican support, with three GOP senators breaking party lines to vote against her (Susan Collins of Maine, Mitt Romney of Utah, and Lamar Alexander of Tennessee).
Shelton’s flip-flopping on key issues like interest rates and whether or not to reinstate the gold standard gave Alexander, Romney, and Collins unease through the process. And former Fed officials and economists have along the way rallied against her confirmation, with an open letter racking up over 130 signees describing her views as “extreme and ill-considered.”
The margin of error was so narrow that Shelton’s fate ultimately fell into the hands of Vice President-elect Kamala Harris. The California senator returned to the Senate on Tuesday afternoon to cast her vote against Shelton’s nomination, rounding out the “no” votes needed to tip the scales.
Senate Majority Leader Mitch McConnell could revisit the vote again. But the GOP may be in a race against time, with Democrat Mark Kelly of Arizona set to replace incumbent Republican Martha McSally in early December.
Meanwhile, the controversial nominee also fell prey to the realities of the COVID-19 era. Two GOP senators, Rick Scott of Florida and Chuck Grassley of Iowa, were unable to vote after entering self-imposed quarantine due to possible exposure to the coronavirus. Grassley announced his quarantine on Tuesday morning.
Just a week ago, Shelton’s odds at confirmation looked bright, as McConnell brought forward her nomination last Thursday — generating buzz that GOP leadership felt confident about the whip count needed to win confirmation. Earlier this week, Morgan Stanley’s economics team began assuming that a Biden-era Fed Board would include Shelton.
But on Monday, Alexander issued a statement saying that he would not support Shelton because he was “not convinced that she supports the independence of the Federal Reserve Board.”
Ultimately, Grassley’s quarantine turned the odds against Shelton, and the Democrats were able to pull Harris back to the Senate chamber to doom Shelton’s chances.
Christopher Waller, the St. Louis Fed economist who was nominated alongside Shelton, remains on the docket for confirmation, and is expected to face fewer obstacles to the Fed Board.
Unlike Shelton, who was confirmed along party lines in the Senate’s banking committee, Waller earned bipartisan support out of the same committee with an 18-7 vote in July.
Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.
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