Fed Nominee Miran Didn’t Sway Wary Senators. It Won’t Matter.

Stephen Miran, chairman of the Council of Economic Advisers and Federal Reserve governor nominee for President Donald Trump, during a confirmation hearing. (Daniel Heuer/Bloomberg)

Skepticism over the independence of Stephen Miran, President Donald Trump’s pick to join the Federal Reserve’s Board of Governors, lingered after his nomination hearing on Thursday.

But with Republicans showing little appetite to buck the president’s agenda, Miran’s confirmation seems assured.

Miran spent more than two hours being grilled by members of the Senate Banking Committee, particularly among Democrats, on Thursday. And while Miran, currently chair of the Council for Economic Advisors, insisted that he supports Fed independence, Democrats—and likely a few Republicans—weren’t buying it.

Miran pushed back on the characterization by Ranking Member Elizabeth Warren, (D., Mass.) that he was simply Trump’s “puppet” on the Fed.

“If I’m confirmed to this role, I will act independently as the Federal Reserve always does, based on my own personal analysis of economic data, my own personal analysis of the effects of economic policies upon the economy—and act based on my judgment of where my judgment of the best economic policy possible.”

Still, it probably won’t matter if skepticism remains, writes Ian Katz, managing director and policy analyst at Capital Alpha Partners, an independent policy research firm based in Washington, D.C. The hearing, while interesting, won’t be all that important to getting Miran confirmed.

“That is, Miran is likely to be confirmed along party lines,” he said.

In fact, Miran outlined plans during Thursday’s hearing that called into question his impartiality. Miran told Senators that if confirmed to serve the remaining four months of Gov. Adriana Kugler’s term, he would be take an unpaid leave of absence from his current job as chair—but he wasn’t planning on resigning. Kugler resigned on Aug. 1, several months shy of her term expiring at the end of January.

“I have received advice from counsel that what is required is an unpaid leave of absence from the Council of Economic Advisers. And so considering the term for which I’m being nominated is a little bit more than four months, that is what I will be taking,” Miran said.

He later added that if he is nominated and confirmed for a longer term than just a handful of months, he would “absolutely” resign from the council.

This unprecedented arrangement provoked sharp criticism from Democrats, who said it raised questions of a conflict of interest since Miran would technically still be working for the president, even while serving on the Fed’s Board of Governors.

“You are going to be technically an employee of the president of the United States, but an independent member of the board of the Federal Reserve,” said Sen. Jack Reed (D., R.I.). “That’s ridiculous.”

Sen. Chris Van Hollen, (D., Md.) questioned whether Miran would even be allowed back on the council after his term as Fed governor if he didn’t vote as Trump mandated. He pointed out Trump has said previously on social media that Fed Chair Jerome Powell should lower interest rates and has noted that if he fails to do so, the Board of Governors should assume control and do what has to be done.

“For you to suggest that the President would somehow welcome you back with open arms at the Council of Economic Advisers should you vote in a way that is opposed by the president of the United States is just not credible in any way given the president’s repeated actions,” Van Hollen said.

Still, Senate Republicans seem to be fast-tracking Miran’s confirmation in an effort to have him participate at the Sept. 16-17 meeting of the Federal Open Market Committee, wrote Brian Gardner, Stifel’s chief Washington policy strategist.

Following Thursday’s hearing, committee members have until Friday to submit written questions and Miran will have until Monday to respond. In order for Miran to be successfully confirmed and sworn in before the September FOMC meeting, his nomination needs to be voted out of the committee by early next week to make way for a full Senate vote.

“Democrats will try to slow down the process, but Miran could be confirmed in time for the next FOMC meeting if Republicans unite behind the decision to confirm him quickly,” Gardner said.

Write to Megan Leonhardt at megan.leonhardt@barrons.com