The Finance 202: Trump failed to remake the Fed in his image. His legacy may be polarizing its confirmations.

But a footnote from the otherwise anticlimactic finale points to a lasting mark the Trump era could leave on the institution: Waller’s winning margin, 48-47 with Democrats unified in opposition, was the narrowest for a Fed governor in at least 40 years.

Nothing in Waller’s profile would seem to explain the partisan verdict the Senate rendered on his nomination. The research director of the St. Louis Fed is squarely in the mainstream of macroeconomic policymaking, broadly considered qualified for the promotion, and drew bipartisan support in the Senate Banking Committee.

Instead, Waller’s result probably owes to two larger forces.

For one, the vote tracks with a recent politicization of Fed nominees. In 2011, for example, Republican senators blocked then-President Obama’s nomination of MIT economist and Nobel laureate Peter Diamond, claiming he was unqualified.

The trend has accelerated under Trump. The president’s attempts to push allies onto the Fed broke with tradition and irked lawmakers on both sides. Shelton, who failed to clear a procedural vote in the GOP-controlled Senate last month, was the latest in a string of people Trump unsuccessfully promoted. There were five in all, including the late pizza magnate Herman Cain and conservative pundit Stephen Moore, whose chief qualification appeared to be loyalty to the president. 

But the Waller vote also unfolded under historically odd circumstances: He is the first central bank pick ever confirmed in a lame duck session — one nominated by a deeply polarizing, recently defeated president. 

Waller’s vote also offered Democrats an opportunity to register their frustrations with the Trump administration’s handling of the economic crisis sparked by the coronavirus pandemic on its way out the door, including its decision to end several of the Fed’s emergency lending programs.

Sarah Binder, a George Washington University political scientist, laid out the broader implications of the “squeaker” vote in a Twitter thread on Thursday and a follow-up conversation with me.

She plotted the narrowing confirmation margins for Fed governors over the last four decades here:

And she notes it took Waller more than 300 days from his nomination to get confirmed, a record with the exception of Betsy Duke, nominated by President George W. Bush and eventually approved unanimously:

The peculiar circumstances of the vote no doubt compounded the trend toward politicization already under way.

But it could also augur a new and even more acrimonious era for Fed confirmations that undermines its authority. 

The danger, per Binder, is that “the public and markets could come to see the Fed as a partisan institution — even if the Board is not filled with partisan warriors and even if the chair prioritizes building broad consensus” for the central bank’s policies.

“The Fed’s legitimacy depends on markets, businesses, and the public believing that the Fed will do what it says it’s going to do,” she adds. “The risk to the Fed is that a string of contentious partisan confirmation fights could raise doubts about the Fed’s commitment to making policy with the longer term interests of the economy in mind.”

One floor vote over a Fed governor likely won’t do lasting damage itself. “But a growing pattern of partisan voting on Fed nominees does raise the possibility,” Binder argues. “And we know that rising partisanship over judicial nominations certainly signals to many voters that judges are not neutral arbiters of the law.” 

President-elect Joe Biden will have limited opportunity to test the pattern. Assuming Senate Republicans don’t try to revive Shelton’s nomination — and Senate Majority Whip John Thune (R-S.D.) called that “unlikely” on Thursday, per Rachel Siegel — Biden will take office in January with only one Fed vacancy to fill. 

Latest on the federal pandemic response

The latest stimulus push is gathering momentum.

More Republicans are expressing openness to the bipartisan deal: “Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi spoke amid growing momentum for a targeted coronavirus relief deal, illustrating how Congress has snapped into action amid a surge in new cases and deaths,” Jeff Stein, Mike DeBonis and Seung Min Kim report.

“Their talks — the first since the Nov. 3 election — came shortly after a growing number of lawmakers have rallied behind a $908 billion bipartisan spending bill that would aim to buttress parts of the economy over the next several months. While some of these lawmakers stopped short of endorsing every part of the proposal, many said the offer was solid enough that it should be used as the basis for negotiations, a sentiment that Pelosi and Senate Minority Leader Charles E. Schumer expressed.”

  • Biden signaled his support as well: “Biden called the $900 billion framework for a congressional aid package proposed by a bipartisan group of members ‘a good start,’ but said more aid would be needed and he urged members to focus on what struggling Americans need most,” CNN’s Stephen Collinson and Maeve Reston report.

What’s in the bill?: “Lawmakers have not yet released legislative text behind the plan, but a one-page summary provided by the group — titled the ‘covid Emergency Relief Framework’ — combines many of the central priorities of congressional leaders of each party, as well as those of Biden,”  
Jeff Stein reports in his breakdown of the plan.

Coronavirus fallout

Economists expect the recovery slowed in November.

It’s jobs report day: “Job gains in November are expected to be weaker than in October, reflecting the impact of virus-related shutdowns by states and local governments due to the record spread of covid-19,” CNBC’s Patti Domm reports.

“Economists expect a consensus of 440,000 nonfarm payrolls were added in November, and the unemployment rate fell to 6.7 percent from 6.9 percent, according to Dow Jones. The total number of payrolls is likely to again be impacted by a sizable drop in government jobs, due to layoffs of census workers by the federal government and cost cutting at the state and local level.”

  • Millions have stopped looking for work: “The labor-force participation rate, or the share of Americans 16 years and over working or seeking work, was 61.7 percent in October, down from 63.4 percent in February. Though up from April’s trough, that is near its lowest since the 1970s, when far fewer women were in the workforce … It appears to have sped up some baby boomers’ decision to retire, shrinking the number of productive workers in the economy prematurely. Second, it is forcing some parents of young children, in particular women, to reduce their hours or stop working altogether, which could make a comeback harder,” the Wall Street Journal’s Gwynn Guilford and Sarah Chaney Cambon report.

The New York Times’s Ben Casselman on the latest weekly unemployment claims data:

More from the U.S.:

  • At least 14,116,000 cases have been reported; at least 275,000 have died. 
  • Another day of grim records: “Almost 213,000 new coronavirus cases were reported on Thursday, the highest of the pandemic. Meanwhile, more than 2,500 fatalities were reported for the third consecutive day — marking the deadliest stretch since the pandemic began,” Antonia Noori Farzan reports.
  • Fall surge in infections preceded by lowest levels of social distancing: “The number of Americans who said they had been in a room with people from outside their households in the past 24 hours grew from 26 percent in April to 45 percent in October, the survey found, while reports of spending time in a group of 11 to 100 people more than tripled,” Antonia Farzan reports.

Warner Bros. makes major break from tradition.

The studio will debut all of its 2021 movies simultaneously on HBO Max and in theaters: “The shift stretches well beyond the next few uncertain shutdown months to include films scheduled for the second half of 2021. ‘Dune’ is slated for release in October, for instance, while ‘Matrix 4’ won’t arrive until December 2021,” Steven Zeitchik reports.

“By at least temporarily undoing the time-honored practice of ‘windowing’ — bringing movies exclusively to theaters first — they could create long-lasting consumer implications. The changes might limit revenue for theaters even after people are able to return to them. In the longer term, it could further habituate Americans to receive their entertainment primarily at home. Still, some experts were inclined to see the effects as circumscribed, in part because the move was born of Warner’s very particular need to boost its streaming service and wouldn’t apply to other companies.”

  • AMC CEO Adam Aron expressed disappointment with the move: “AMC, the world’s largest movie theater chain, has launched efforts to sell more than $700 million worth of stock while warning that failing to raise enough liquidity might force the company into bankruptcy,” the WSJ’s Alexander Gladstone reports.

More from the corporate front:

  • Airlines cut 29,000 workers through mid-October: “The U.S. Transportation Department said U.S. airlines employed 673,278 workers in mid-October, which was 81,749 fewer than in March when U.S. travel demand started falling dramatically due to the pandemic,” Reuters’s David Shepardson reports. Southwest is warning it could furlough 6,800 employees, moving the airline closer to its first involuntary furloughs in its history.
  • Walmart is paying its workers $388 million in holiday bonuses: “This will be Walmart’s fourth round of such bonuses this year. The company said it also paid its workers quarterly business performance bonuses throughout the year, bringing the total amount Walmart has paid in bonuses this year to upwards of $2.8 billion,” CNN Business’s Nathaniel Meyersohn reports. “However, unions, worker-advocacy groups and some in Congress say Walmart workers should receive permanent hourly wage bumps or additional hazard pay.”

The transition

Brian Deese will lead the National Economic Council.

Another BlackRock alum tapped for the economic team: “The appointment, which does not require Senate confirmation, highlights Mr. Biden’s plans to use economic policy initiatives to drive climate policy. It also defies pre-emptive criticism from some environmental groups, which have targeted Deese for his work in recent years as the sustainability director for the asset-management giant BlackRock,” the New York Times’s Jim Tankersley and Lisa Friedman report.

“In a statement, Biden hailed Deese as ‘a trusted voice I can count on to help us end the ongoing economic crisis, build a better economy that deals everybody in, and take on the existential threat of climate change in a way that creates good-paying American jobs.’”

  • Biden taps Vivek Murthy as nation’s top doctor: Murthy, a former U.S. surgeon general, has been asked to reprise the role in an expanded version in the new administration,” Toluse Olorunnipa and Amy Goldstein report.
  • Fauci will also stay on: “Biden told CNN that Anthony S. Fauci, the nation’s top infectious-disease expert, would serve as a chief medical adviser and help his administration with its coronavirus response plan,” my colleagues write.
  • Biden is urging Americans to wear masks for his first 100 days: “Just 100 days to mask, not forever. One hundred days. And I think we’ll see a significant reduction,” Biden said in an interview with CNN’s Jake Tapper.

Market movers

S&P 500 falls slightly amid vaccine concerns.

Overall there was little change in the major indexes: “The broad equity benchmark dipped just 2.29 points, or less than 0.1 percent, to 3,666.72 after hitting an all-time high earlier in the session … The Dow Jones Industrial Average gained 85.73 points, or 0.3 percent, to 29,969.52 … The Nasdaq Composite rose 0.2 percent, or 27.82 points, to 12,377.18,” CNBC’s Yun Li and Jesse Pound reports.

“Major averages cut gains quickly in the final hour of trading after Dow Jones reported Pfizer now expects to ship half of the doses it had previously planned this year after finding raw materials in early production that didn’t meet its standard.”

Pocket change

Lawmakers from 34 countries team up to press Amazon.

The campaign was launched on Black Friday: “More than 400 lawmakers from 34 countries have signed a letter to Amazon.com Inc boss Jeff Bezos backing a campaign that claims the tech giant has ‘dodged and dismissed … debts to workers, societies, and the planet,’ organizers said,” Reuters’s Paul Sandle reports.

“The letter’s signatories include U.S. Reps. Ilhan Omar (D-Minn.) and Rashida Tlaib (D-Mich.), former UK Labour Party leader Jeremy Corbyn and Vice President of the European Parliament Heidi Hautala, co-conveners Progressive International and UNI Global Union said.” (Amazon CEO Jeff Bezos also owns The Washington Post.)

Mortgage rates sink to record low again: “The 30-year fixed mortgage rate, the most popular loan product, sank to its lowest level on record this week, marking the 14th historic low it has hit this year,” Kathy Orton reports.

“According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average fell to 2.71 percent with an average 0.7 point. (Points are fees paid to a lender equal to 1 percent of the loan amount and are in addition to the interest rate.) It was 2.72 percent a week ago and 3.68 percent a year ago.”

Trump tracker

Trump has raised $495 million since mid-October.

His election fraud claims have helped power the fundraising haul, with $207.5 million coming since Election Day. “The sum raised since Oct. 15 far exceeds fundraising records set by the Trump operation in roughly comparable time periods at the height of the 2020 presidential campaign and is an unusually large amount to raise after the election,” Michelle Ye Hee Lee and Anu Narayanswamy report.

“That means between Oct. 15 and Nov. 23, Trump raised an average of nearly $13 million per day — a massive amount fueled by a deluge of email and text fundraising appeals sent out by the Trump Make America Great Again Committee, a joint fundraising committee that raises money for the president’s campaign, the Republican Party and Trump’s new leadership PAC, Save America.”

Justice Department investigated a top GOP fundraiser and a Kushner lawyer in bribe-for-clemency scheme. 

The probe, revealed Tuesday by the unsealing of court records, “concerned efforts by the lawyer for Mr. Kushner, Abbe Lowell, and the fund-raiser, Elliott Broidy, who pleaded guilty in October to a charge related to a different scheme to lobby the Trump administration,” the New York Times reports. 

“A billionaire real estate developer from the San Francisco area, Sanford Diller, enlisted their help in securing clemency for a Berkeley psychologist, Hugh L. Baras, who had received a 30-month prison sentence on a conviction of tax evasion and improperly claiming Social Security benefits, according to the filing and the people familiar with the case. Under the suspected scheme, Mr. Diller would make ‘a substantial political contribution’ to an unspecified recipient in exchange for the pardon. He died in February 2018, and there is no evidence that the effort continued after his death.”


  • The Labor Department releases the November jobs report
  • AT&T chief executive John Stankey speaks at a Post event about the future of broadband access

The funnies

Bull session

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