Nominee for the Federal Reserve. To be exact. [gavel] mr. Crapo this hearing will come to order. This morning we will consider the nominations of the honorable judy shelton to be a member of the board of governors of the Federal Reserve system. And dr. Christopher waller, to be a member of the board of governors of the Federal Reserve system. Welcome and congratulations to each of you for your nominations. I see friends and family in the room today and i welcome them as well. Were fortunate to have these two highly qualified nominees appearing today. These positions are critical to ensuring a safe, sound and vibrant Financial System and a healthy, growing economy. The Federal Reserve was created by congress as the nations central bank to promote a stable economy and a safer, more flexible Financial System. Among the Federal Reserves responsibilities is conducting the nations Monetary Policy with the mandate of promoting maximum employment, stable prices and moderate longterm Interest Rates. In addition to its Monetary Policy role, it oversees a significant portion of the banking sector, including large regional and community banks, as well as certain nonbanks and aims to foster a safe and efficient payment and settlement system. With this in mind, it is important that we nominate an confirm wellqualified candidates with different perspectives to the positions of governors, to ensure robust debate and more effective decisions. Before turning to dr. Shelton and dr. Waller, im entering into the record a letter from over 100 economists supporting the nomination of dr. Waller and also an article from the wall street journal supporting dr. Shelton, titled the war on judy shelton. Dr. Sheltons experience working most recently served as the executive director of the European Bank for reconstruction and development, and was confirmed by voice vote in the senate in 2018. Dr. Sheltons experience working for nonprofits and academic institutions forged her deep knowledge of democracy, economic theory and Monetary Policy that will broaden and diversify the feds perspective. Dr. Waller has served as the Research Director at the Federal Reserve bank of st. Louis for the last 11 years and aided the president of the st. Louis fed in analyzing the economy and recommending u. S. Monetary actions. His research on monetary theory and the microfoundations of money and Payment Systems will be valuable as we are seeing a rise in cryptocurrencies and Digital Currency in this country and abroad. Im confident that dr. Shelton and dr. Waller will bring strong leadership to the Federal Reserve system. As governors of the Federal Reserve, dr. Shelton and dr. Waller will play key roles in carrying out the feds regulatory and supervisory activities, consistent with the law. While also playing an Important Role in striking the balance between tailored regulations and supervision and safety and soundness. I appreciate the positive meetings ive had with each of you leading to todays hearing. I look forward to continuing a robust discussion on the following topics. The importance of rightsizing regulations and tailoring the supervisory framework to support a vibrant, growing economy, while also ensuring a safe and sound Financial System. Assessing marketbased fixes to maintain stability in money markets. The development of Central Bank Digital currencies and other Technological Innovations in the financial space, which we also discussed with chairman powell yesterday. And continuing to encourage the Federal Reserve to submit all rules to congress under the congressional review act, as well as to submit all significant guidance for purposes of the congressional review act. I look forward to working with dr. Shelton and dr. Waller on these and other areas where the fed and congress can act to further reduce unnecessary burdens and promote Economic Growth. Congratulations again on your nominations and thank you and your families for your willingness to serve. Senator brown. Mr. Brown thank you, mr. Chairman. Welcome and thank you for beginning this hearing earlier because of votes coming. Ms. Shelton, mr. Waller, id like to extend my greetings to you and your family and your friends who have joined you. Welcome. Fed independence matters, we know economies with independent Central Banks have less price volatility, fewer bank panics and more stable communities. One of the nominees, though, today before us, doesnt believe in an independent fed. And has spent her entire career advocating for policies that would make our economy more volatile, give families and businesses even more to worry about in an uncertain world. The point of the independent Federal Reserve is to be a steady, guiding hand to worry about the big picture of the economy, so hardworking families dont have to. But for ms. Shelton, these arent hazards to avoid. They are the goal. We all understand theyre economic issues, there are conservatives and liberals and most people follow somewhere in the middle of that continuum but ms. Shelton is far outside the mainstream. Shes off the ideological spectrum. For three decades, ms. Shelton has been a prominent advocate for returning to the Gold Standard. In making the case for ms. Sheltons nomination, her friend, james grant, wrote in the wall street journal with the nomination of judy shelton to the fed, the discussion is tilted to gold. Gold is money or legacy form of money. Ms. Shelton contends and the Gold Standard is a superior form of monetary organization. Unquote. People can agree to disagree on certain issues. But we dont get our own facts and the facts are clear. If we as a nation had followed ms. Sheltons advice and had not advanced beyond the Gold Standard nearly half a century ago, our nation would have bounced from boom to bust without the monetary new tools necessary to pull us out of recessions. Depressions would have been deeper and longer, millions of working families would have suffered even more for no reason and for certainly inexplicable reasons to. They thats not the end of the story. In multiple writings, ms. Shelton was opposed to the fdic deposit insurance that everyone takes for granted thats been part of our culture and our economy for so many years. The insurance most importantly that protects the savings of hardworking americans. In other words, she thinks that if a bank fails, and we all remember far too vividly 10, 12 years ago, when they did indeed fail, that all the family whose savings and paychecks are stored in that bank should just lose all their money. Passing federal deposit insurance was one of president roosevelts first acts during the Great Depression for a reason. That guaranteed that your money is safe in the bank as the bedrock of our modern economy. This is not some intellectual exercise about moral hazard. This is the real world. I dare anyone to explain to working families in idaho or pennsylvania or alabama or louisiana or minnesota or new jersey or rhode island, i dare anyone to explain to working families that experienced Bank Foreclosures in the Great Recession or the savings and loan crisis that fdic insurance is a hugely distorting factor. With ms. Shelton, it doesnt stop there. The money in your wallet is backed by the full faith and credit of the United States government. As ms. Shelton advocated for doing away with the dollar and replacing it with a common currency for north america. Im serious. To make nafta more effective, she mused the dollar could be replaced with a common currency for north america called the amero. At other times shes called for the creation of a generic global currency backed by gold. That kind of globalist, probably no better word than that, the globalist ideology doesnt belong anywhere near our fiscal and Monetary Policy. The american dollar is the worlds reserve currency. It should stay that way. We want it that way. We agree that it should be that way and were proud of it. The bottom line is ms. Shelton has too many alarming ideas and has flipflopped on too many important issues to be confirmed for this job. We know shell say whatever the president wants her to say. That further threatens the independence of the fed. She was an Interest Rate hawk until President Trump wanted lower rates. She opposed tariffs on china before she was for them. And based upon what i and other Committee Members heard in meetings with her, it appear that ms. Shelton has changed pretty much all her positions on everything from the Gold Standard to steadfast opposition to fdic insurance. Thats not the steadying hand required at the fed. 11 years into this recovery, more than ever, the fed needs to be independent and careful. Not reactive to every tweet coming out of the white house. A vote for ms. Shelton is a vote against fed independence and our nations reputation as a financial bulwark for the whole world. Our other nominee to the board is an economist whose work has been subject to peer review and whose analysis has helped develop the Research Path undertaken by the singlist fed. By the st. Louis fed. I look forward to hearing how he will hold wall street account accountable if hes confirmed. Last, mr. Chairman, i want to note that there should have been a third chair at this table. Were not sure why but ms. Jessie liu was supposed to be considered by this committee today. Her nomination was withdrawn 36 hours ago. Although the treasury secretary told me publicly yesterday he knew for two days. So i dont think the chair of this committee and i know i didnt know as Ranking Member. The position she was nominated for is responsible for overseeing our countrys work, preventing terrorists and drug cartel financing, enforcing economic sanctions. Now that her nomination has been withdrawn, that position will remain empty. Once again, to protect himself, the president of the United States put our National Security at risk. Thank you, mr. Chairman. Mr. Crapo thank you. Well now administer the oath. Will you please rise and raise your right hand. Do you swear or affirm that the testimony you are about to give is the truth, the whole truth and nothing but the truth so help you god . And do you agree to appear and testify before any duly constituted committee of the senate . Thank you. You may be seated. Your written statements will be made a part of the record in their entirety. And before you begin your statements, i invite you to introduce your family in attendance. Thank you. You may start, ms. Shelton. Dr. Shelton thank you, mr. Brown and members of the committee. Thank you for the opportunity to appear before you today. I am honored that the president has nominated me to serve on the board of governors of the Federal Reserve system and im grateful to this committee for considering me for the position. Im also deeply grateful for the support of my husband of 42 years, gill, who is here today, along with our son, and i want to give special thanks to my mother, jeannette potter, and the healthy contingent of family members seated behind me, john and charmin and jim and christie, rick and susie. They all flew out from california yesterday to be here today with me. It means a lot. For nearly four decades, going back to my years as a doctoral student at the university of utah, i have focused on the impact of Monetary Policy on Economic Performance. My studies encompass current financial and economic conditions, as well as historical antecedents tracing back to our constitution. One thing is very clear. The power to regulate the value of u. S. Money is granted to congress. Congress created the Federal Reserve as an independent agency and through the Federal Reserve reform act of 1977, charged it with the mandate to promote maximum employment, stable prices and moderate longterm Interest Rates. Our central bank has been entrusted with considerable power to carry out its responsibilities. Along with the political independence and operational autonomy granted to the Federal Reserve comes an obligation to be wholly accountable, both to congress and to the public. If confirmed, my priority will be to support Monetary Policy that facilitates productive Economic Growth while also ensuring the soundness and stability of the u. S. Financial system. In exercising the Federal Reserves regulatory oversight, i will support policies that are effective, efficient and appropriately tailored to Financial Institutions, allowing them to better serve their customers and communities in ways consistent with maintaining a safe Financial System. I am well prepared to conscientiously fulfill the duties of the position for which i have been nominated based on my background and experience. The First College course i ever taught was money and banking. As a Research Scholar at the Hoover Institution at stanford university, i analyzed the relationship between Monetary Policy and Economic Sustainability in the context of geopolitical competition. My first book accurately predicted the collapse of the soviet union. My second book examined the impact of currency movements on trade. I have testified numerous times as an Expert Witness before congressional committees in both the house and senate. As u. S. Executive director of the European Bank for reconstruction and development, i demonstrated strong leadership to achieve high priority objectives in accordance with u. S. Strategic interests. Combining academic perspective with realworld insights, i hope to contribute intellectual diversity as a governor and would work collegially to promote sound money and sound finances. In closing, i wish to emphasize my commitment to honor the Constitutional Authority of congress to regulate the value of u. S. Money. By fulfilling the statutory mandate congress has assigned to the Federal Reserve, we ensure that americas money remains the worlds most respected currency and its most trusted standard of value. Thank you again for the privilege of appearing before you today and i look forward to your questions. Mr. Crapo thank you. Dr. Waller. Dr. Waller chairman crapo, Ranking Member brown, members of the committee, thank you for the opportunity to appear before you today. I am honored to have been nominated by the president for this prestigious position. And grateful to the committee for its consideration of my nomination. I would be humbled to be able to serve my country in this capacity. Im also thankful for the support of my family members who are here with me today. My loving wife, lori, my three children, sara, maggie and sam, and my mother, anne, who has been my hero throughout my life. For the last 11 years, i have served as the director of research at the Federal Reserve bank of st. Louis. During that time, i have attended over 60 federal open Market Committee meetings and i have served as the main policy advisor to my bank president. As a result of this experience, i fully understand and support the dual mandate of the Federal Reserve. I also understand and appreciate the Federal Reserves role in pursuing policies to ensure a safe and stable Financial System. If i am confirmed, i will continue to advocate for policies that achieve our dual mandate and maintain financial stability. I believe that my background and experience makes me uniquely qualified to fulfill the responsibilities of a Federal Reserve governor. In my decadelong experience as Senior Reserve bank official, i was deeply involved in policy issues confronting the Federal Reserve. But in my role, i also spent a substantial amount of time talking to members of our community about how Monetary Policy affected their lives and their businesses. That public input affected how i thought about policy and its consequences. I also learned how valuable it was to communicate