No date in sight for Fed Board nomination vote

No date has been set for the Senate to vote on the Federal Reserve Board nominations of Judy Shelton and Christopher Waller, despite the board being understaffed during the current crisis.

The pair underwent a nomination hearing on February 13, after which a date was due to be set for the first of two votes they would have to pass before being appointed. Shortly after, however, Congress went into crisis-fighting mode and lockdown measures were imposed.

A majority of senators must be present for the vote to take place. While the Senate has begun to resume some of its normal schedule, lockdown measures mean hearings are being conducted remotely.

Until hearings resume in a physical form, Central Banking understands it is unlikely any progress will be made on the nominations.

The first vote will be conducted by the Senate Banking Committee and will require a simple majority. There are 25 members on the committee, 13 Republicans and 12 Democrats. The second vote is a full Senate vote, of which there are 53 Republicans, 45 Democrats and 2 Independents.

Understaffed during crisis  

The delay in voting on the nominations comes during a period when the board is understaffed and fighting a crisis. The Fed is currently implementing an array of policies and new lending facilities, which spread over a range of responsibilities and functions of the central bank. 

The board currently has only five of its seven positions filled. While board members tend to be best known for their role in monetary policy decisions, they also take on numerous administrative and regulatory functions.

There are eight key board committees ranging from board affairs and financial stability to community banking (see figure 1).

As the figure shows, an understaffed board means some members are currently chairing or serving on multiple committees. Lael Brainard, for example, sits on seven of the eight committees and chairs four of them. Michelle Bowman chairs two committees and sits on five.

Peter Ireland, a former Fed economist, tells Central Banking that filling the vacant positions would have given the Fed more resources to draw on when the crisis hit. Issues that came before the committees could then have been dealt with more quickly and efficiently.

Ireland notes, however, that strong leadership at the top was probably the most important factor in the Fed’s crisis response. He thinks that the addition of new officials will be most valuable during the recovery phase.  

“There will have to be a more broad-based effort at the Fed to devise a plan for adjusting monetary and financial regulatory policies to whatever becomes the new normal,” Ireland says. “For those purposes, it would certainly be helpful to have the two remaining seats filled.”