If President Biden nominates Jerome Powell for a second term as chairman of the Federal Reserve, the question for which we’ll be waiting is whether Mr. Powell tried to derail the nomination to the Fed’s board of Judy Shelton. President Trump had signaled his plan to nominate Ms. Shelton in July 2019. In a razor-thin vote in late 2020, though, Ms. Shelton was defeated when two Republicans voted “no” and one failed to show up at all.
It turns out that just before that vote, one of the most dramatic in the history of the Federal Reserve, Chairman Powell got on an extraordinary string of telephone calls with senators who could be key. We don’t yet know what was said on those calls (hence this editorial). The calls, though, were logged on the Fed Website. All the more reason that if Mr. Powell is renominated, at least one senator should ask what he was doing.
Mr. Powell himself has suggested that it would be out of place for him to take sides on a nomination. Right after President Trump tweeted his plan to nominate Ms. Shelton, Congresswoman Jennifer Wexton, at a hearing, asked Mr. Powell about the gold standard. The chairman immediately noted that this could be considered commenting on a particular nominee and “of course I would not do that.”
“We do not play a role in the nomination process,” Mr. Powell explained (the video is above). “It’s totally up to the President and the Senate, and we are completely on the sidelines.”
Yet Mr. Powell did voice his opposition to the gold standard, some elements of which Ms. Shelton has supported. Mr. Powell didn’t say so, but elevating Ms. Shelton to the board of the Fed might have led to a breach of the unanimity that has obtained among the governors under Chairman Powell. No dissenting votes on monetary policy have been recorded in the board of governors in Mr. Powell’s and Janet Yellen’s entire tenures as chairmen.
The nomination drama intensified on November 12, when the Senate agreed to proceed to a confirmation vote on November 17. Bloomberg News reported that Ms. Shelton’s nomination had gained “new life.” On the 14th, though, Senator Rick Scott, a Republican, announced he was self-quarantining after exposure to Covid. Senators Blumenthal and Murphy, both Democrats, said they’d do the same.
On the 16th, Senator Lamar Alexander, a Republican of Tennessee, announced that he opposed Ms. Shelton’s nomination but would not be in Washington for the vote. That, the Washington Post estimated, put the Shelton confirmation “on knife edge.” That afternoon, Chairman Powell, got on the phone. At 1 p.m., he spoke with Senator Mike Rounds, a member of the Banking Committee.
That conversation is listed in Chairman Powell’s online calendar, as are others. At 5 p.m., Mr. Powell spoke with Senator Jack Reed, a Democrat. At 5:45 p.m., he spoke with yet another committee member, Senator Tom Cotton, a Republican. At 6:15 p.m., Mr. Powell spoke with Senator Mitt Romney, who, along with Senator Susan Collins of Maine, had come out earlier against Ms. Shelton’s confirmation.
Then, on the 17th, the day of the vote, Senator Grassley announced he, too, would be self-quarantining. From Senator Romney a courtesy, known as pairing, was sought. It would have canceled the effect of either one being absent. Mr. Romney refused. His hostility has long struck us as newsworthy, given that he had stood for president in 2012 on a platform calling for establishing a commission to look at monetary reform.
A monetary commission is one of Ms. Shelton’s goals. Its aim would be to look at, among other things, the restoration of a metallic standard for the dollar. It seems, though, that Mr. Romney’s support was shallow, which the voters may have figured out in 2012. In any event, as the Senate was readying its vote on Ms. Shelton’s nomination, Mr. Powell spoke by phone with two other GOP solons — Thom Tillis and Ben Sasse.
A spokesman for Senator Tillis emails us that the senator spoke with Mr. Powell about regulatory issues and that Ms. Shelton “didn’t come up.” He notes that Mr. Tillis was a “strong supporter” of Ms. Shelton, both in the Banking Committee and on the Senate floor. Mr. Tillis is the only senator who replied to our inquiries about the phone calls with Mr. Powell. Nor did the Fed itself reply to a request from the Sun for comment.
Ms. Shelton lost the vote — 49 to 48 — because all 47 Democrats, including Messrs. Blumenthal and Murphy, voting against her were joined by Mr. Romney and Ms. Collins, while Senator Alexander lurked in Tennessee and Mr. Grassley was out. So there was no tie for Vice President Pence to break. Senator McConnell then switched his vote to “nay,” so he could bring the matter up again, though success was fast receding.
There were some hopes for a second vote before Democrat Mark Kelly of Arizona was sworn to replace Republican Martha McSally. It seems, though, that on December 2, at 4:15 p.m., Mr. Powell spoke with Ms. McSally on the phone. We don’t know what Mr. Powell said then, either, but the Senate, if he is renominated, should ask him about all his conversations with the senators.
There could well be an innocent explanation for all these calls on the eve of the vote, but it would be a serious matter if a Fed chairman tried to put his thumb on the senatorial scale. With Ms. Shelton’s fate in limbo, the Wall Street Journal issued an important editorial in her support. It suggested that Senator Alexander’s professed fear for the Fed’s independence had it exactly backwards. It called on Mr. Alexander to reconsider.
“The Fed needs Ms. Shelton’s voice,” the Journal reckoned, “because the Fed is already sacrificing its independence.”
Once Mr. Kelly was sworn in, hopes for diversity of thought on the Fed board then hung by a thread, if that, on the outcome of the two Senate runoff races in Georgia or one or two of the recalcitrant Republicans. In any event, on December 8, in a rare lunch at the Fed’s headquarters, Mr. Powell’s schedule notes, the chairman did sit down with a guest — the soon-to-be former senator from Tennessee, Lamar Alexander.