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Trump Names 2 New Candidates For Federal Reserve Board


As the nation prepares to celebrate Independence Day, some are sounding an alarm about the independence of the Federal Reserve. President Trump announced two new picks for the central bank's governing board this week - this after the president's last two choices backed out amid criticism they were too political. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: President Trump announced his nominees to help steer the Fed in a series of tweets Tuesday night. The first is a fairly conventional choice. Christopher Waller's a former economics professor at Notre Dame who's now the director of research at the Federal Reserve Bank in St. Louis. It was Trump's second pick, Judy Shelton, who raised eyebrows.

ALAN BLINDER: I think when you mention her name to a mainstream economist, the first thing they think about is the gold standard.

HORSLEY: That's not a compliment. Former Fed Vice Chairman Alan Blinder says advocating for a return to the gold standard, as Shelton does, is well outside the mainstream.

BLINDER: To say it went out with high-button shoes is far too charitable. It's a completely crazy idea.

HORSLEY: Blinder says tying the dollar to a fixed amount of gold would limit the overall money supply to whatever miners happened to dig out of the ground. Still, he's not terribly worried about Sheldon actually imposing the gold standard even if she wins a seat on the Fed's seven-member governing board.

BLINDER: I think most everybody else around the table would look at her political attitudes as if she landed from Mars.

HORSLEY: James Pethokoukis of the American Enterprise Institute is not so confident. He warns if Shelton makes it onto the Fed board and President Trump is reelected, she could be in line to replace Jerome Powell when his term as chairman expires in 2022.

JAMES PETHOKOUKIS: Given her views about the gold standard and given her criticism of the Fed's extraordinary actions during the financial crisis, what would happen if Judy Shelton was head of the Fed during another financial crisis? I think that's really unclear, and it's worrisome.

HORSLEY: During the Great Recession, Shelton criticized the Fed for its efforts to prop up the economy. Now, she takes the opposite tack. Even though unemployment's as low as it's been in nearly 50 years, Shelton echoes Trump's call for a cut in interest rates. Here she is on CNBC.


JUDY SHELTON: The last thing you want to do is starve a high-growth productive economic trend by not providing the financial resources.

HORSLEY: Shelton did not respond to an interview request. Experts can certainly disagree about Fed policy and whether interest rates are too high or too low. But chief economist Diane Swonk of Grant Thornton says Shelton's views seem to be driven less by economic conditions and more by which political party controls the White House.

DIANE SWONK: She's done a 180 on many of her views, and when they do a 180 on their views like that, they seem to be politically motivated instead of economically motivated.

HORSLEY: The same complaint helped to sink two of the president's earlier Fed picks, Stephen Moore and Herman Cain. But Trump is not giving up in his efforts to put his own stamp on the central bank. Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.
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