Sarah Bloom Raskin faces controversial Senate hearing

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Sarah Bloom Raskin is a longtime Washington politician with progressive credentials and a track record of blowing the whistle on the fossil fuel industry, qualities that helped her win the White House nomination as Washington’s top cop. American bank.

But those same views could leave her with a narrow path to confirmation as the Federal Reserve’s vice chairman for oversight — especially if Sen. Ben Ray Luján, a New Mexico Democrat recovering from a stroke , is not present for his vote before the entire Senate. . (A senior aide to Mr. Luján said he was expected to make a full recovery and would return in four to six weeks barring complications.)

And Ms. Raskin’s views ignited sparks during her hearing before the Senate Banking Committee on Thursday.

Ms. Raskin was nominated alongside Lisa D. Cook and Philip N. Jefferson, both economists vying for seats on the Fed’s Board of Governors. Mrs. Raskin, Dr. Cook and Dr. Jefferson questions on the ground of the Senate Banking, Housing and Urban Affairs Committee on Thursday morning.

Ms. Raskin, a former Fed governor and senior Treasury official who was most recently a professor at Duke Law School, is seen as a well-known entity in the banking industry that she would oversee. But business groups have criticized her attention to climate issues – including an opinion piece she wrote in 2020 criticizing the Fed’s decision to design one of its emergency lending programs in a way that enable fossil fuel companies to access emergency loans.

Senator Patrick J. Toomey of Pennsylvania, the committee’s top Republican, called the hearing a “Fed independence referendum” during his opening remarks, and tore Ms. Raskin over her views on climate regulations, which he had previously described as “disqualifying”. .”

Such back-and-forth opposition from Republicans may mean more than just a stormy hearing — Ms. Raskin may need to maintain the support of all Democrats in the Senate to stay on the narrow path to confirmation. If Democrats were to lose their shaky hold on the Senate majority because Mr. Luján has yet to return, it is uncertain whether she would get the votes she needs to pass.

The Fed nominees need a simple majority to clear the Senate Banking Committee and then get confirmation from the Senate as a whole, which means it’s possible Ms Raskin could pass if the 50 senators who form caucus with Democrats vote in favor, with Vice President Kamala Harris breaking a tie.

The job of vice president in charge of oversight is arguably the most important job in U.S. financial regulation, and given those high stakes, Ms. Raskin’s chances are being closely watched.

“I don’t expect her to get many Republican votes, if any,” said Ian Katz, managing director of Capital Alpha Partners, explaining that he thinks she will eventually get enough Democratic support to pass. , assuming that all senators, including Mr. Luján, vote. “You hear different things from the industry: you hear concerns that they are too progressive, but you also hear that they are well within the mainstream.”

Oil and gas companies are mounting a campaign against more decisive climate oversight by the Fed, fearing that the central bank will subject banks to strict oversight that will deter them from lending money to industry. This could raise skeptical questions for all three candidates.

“I am concerned about all the Fed nominees and their apparent willingness, despite what some of them have said, to include banking and financial regulations aimed at prohibiting legal industries from operating in the United States by borrowing money,” Senator Jerry Moran of Kansas, a Republican who sits on the committee, said Wednesday.

Mr Toomey said in an interview on Wednesday that he also had reservations about Dr Cook.

Much of the opposition from Republicans and lobbyists, however, is aimed at Ms. Raskin. She argued in a Project Syndicate column recently that “all US regulators can – and should – review their existing powers and consider how they might be leveraged to mitigate climate risk.”

But Ms Raskin struck a softer tone during the hearing, pushing back against the idea that she would support the use of banking supervision to choke off lending to oil and gas companies.

“It’s inappropriate for the Fed to make decisions and credit allocations based on picking winners and losers — banks pick their borrowers, the Fed doesn’t,” Raskin said repeatedly in response to questions from senators. She also stressed that Fed policy-making is a collaborative process and that she would not make decisions solo.

It is not known at this stage whether these assurances will be enough for his detractors. Mr Toomey read to Ms Raskin her earlier comments on climate regulations during her testimony.

Chamber of Commerce, in a letter at the Senate committee last week urged lawmakers to question Ms. Raskin about her position on whether the Fed’s regulatory approach should attempt to limit access to credit for oil and gas companies.

The business group asked whether Ms Raskin would be independent of politics. After Democratic members of the Federal Deposit Insurance Corporation board of directors clashed and ultimately rushed the resignation of Trump appointee Jelena McWilliams, who was the regulator’s chair, some Republicans have raised concerns about to the fact that something similar could happen at the Fed.

In December, partisan politics helped sabotage the nomination of Saule Omarova, who withdrew from consideration to be Comptroller of the Currency after attacks by Republicans and banking lobbyists, and as she struggled to secure a broad enough support from the Democrats.

By contrast, the banking industry has taken a more benign view of Ms. Raskin. The Financial Services Forum, which represents the CEOs of the biggest banks, praised Ms. Raskin and the other White House Fed picks in a report after the announcement of their appointments, just like the American Bankers Association.

Ms Raskin is seen as a qualified candidate who understands the roles various regulators play in overseeing banks, according to a banking executive who asked not to be identified discussing regulatory issues. Even though bankers expect Ms Raskin to be confirmed, they are waiting for more clarity on her stance on climate finance and disclosures, the executive said.

As she is received as a mainstream choice, centrist Democrats seemed pleased with Ms Raskin.

“I was very impressed with her,” Senator Mark Warner, a Democrat of Virginia, said Tuesday, adding that he had not yet met her but was “favorably inclined” and noting that the banks were shown to be comfortable with her.

Sen. Joe Manchin III of West Virginia, a key centrist Democrat, said Wednesday he hasn’t researched the candidates yet, adding that he’s “going to get into that” because he’s “very concerned” about issues such as inflation.

A Harvard-educated lawyer, Ms. Raskin is a former assistant secretary in the Treasury Department, where she focused on the cybersecurity of the financial system, among other issues. She Also spent several years as Commissioner of Financial Regulation of Maryland. Ms. Raskin is married to Rep. Jamie Raskin, a Democrat from Maryland.

If confirmed, she would be only the second person officially named the Fed’s vice chairman for oversight, succeeding Randal K. Quarles, a Trump administration pick that generally favored leaner, sharper regulation. Ms Raskin, on the other hand, is used to calling for stricter regulation.

Both Dr. Cook and Dr. Jefferson could be asked about their views on policies and work history. The Fed has seven governors — including its chairman, vice chairman and vice chairman for oversight — who vote on monetary policy alongside five of its 12 regional bank presidents. Governors hold a constant vote on regulations.

Dr. Cook, reportedly the first black woman to serve on the Fed’s board, is a Michigan State University economist well known for her work to improve diversity in the economy. She earned a doctorate in economics from the University of California at Berkeley and served as an economist on the White House Council of Economic Advisers under President Barack Obama.

“High inflation is a grave threat to a long and sustained expansion, which we know raises the standard of living for all Americans and leads to shared, broad-based prosperity,” Dr. Cook saidafter emphasizing his decades of experience, called tackling the current U.S. price spike the Fed’s “most important task.”

Dr Jefferson, who is also black, is an administrator and economist at Davidson College who has worked as research economist at the Fed. He wrote on the economics of povertyand his research sought to determine whether monetary policy that stimulates investment with low interest rates helps or hurts less educated workers.

He supported that the Fed must “ensure that inflation falls to levels consistent with its objectives”.

Dr Cook, Dr Jefferson and Ms Raskin are awaiting confirmation alongside Jerome H. Powell – who was previously reappointed Fed Chairman – and Lael Brainard, a Fed Governor who is the administration’s pick Biden for vice president. Sen. Sherrod Brown of Ohio, chairman of the committee, said the five nominees will face a key committee vote on Feb. 15, and Sen. Chuck Schumer of New York, the majority leader, “knows how to act.” quickly” for a floor vote.

If all passes, the Fed leadership will be the most diverse both in terms of race and gender it has ever been – fulfilling Mr Biden’s pledge to make the long-running heavily male and white central bank more representative of the public it is intended to serve.

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