President Biden’s nominees to serve on the Federal Reserve Board of Governors faced a heated grilling from Republicans on Capitol Hill Thursday, as GOP lawmakers warn of central bank overreach and claim some of the president’s nominees threaten to move the Fed further away from its mandate focused on price stability and maximum employment.
Sarah Bloom Raskin, who is nominated to serve as the Fed’s top bank regulator, defended her views on financial regulators’ role in combating climate change, saying in her opening statement that banks choose their borrowers, the Fed does not.
“The role does not involve directing banks to make loans only to specific sectors, or to avoid making loans to particular sectors,” Raskin said.
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Her remarks came as Republicans took aim at Raskin over past speeches she’s given and op-eds she’s written about climate change and the financial industry.
“Ms. Raskin has repeatedly and specifically advocated that the Fed allocate capital away from the fossil fuel industry as a way to combat climate change. She says the quiet part out loud,” Senate Banking Committee Ranking Member Pat Toomey said in his opening statement Thursday.
In a series of exchanges with Republican senators, Raskin — who served on the Fed from 2010 to 2014 and was Deputy Treasury Secretary in the Obama administration — repeatedly refuted that characterization of her past remarks.
“It is inappropriate for the Fed to make credit decisions and allocations based on choosing winners and losers,” Raskin said.
She also reiterated that the Federal Reserve’s role is set in law and attempted to shut down allegations that she would work to expand it.
“I’m not sure I see any attempt in any supervisory context or within the existing mandates of the Federal Reserve that have been set up by Congress to do anything that would favor a specific industry,” Raskin said at one point. “That is not how regulation and supervision is done.”
Raskin also emphasized that some of her past writing has been taken out of context. Several Republican lawmakers highlighted an op-ed Raskin wrote in 2020, near the start of the coronavirus pandemic, in which she argued the Fed should not be directing federal aid to fossil fuel companies. Senator Kennedy of Louisiana summarized the argument as “save everyone but the gas and oil industry” and asked whether she meant that.
“The editorial is one that I wrote, and I wrote it in the context of the Federal Reserve’s emergency lending facilities. This was a special program set up by the CARES Act by the Congress that appropriated taxpayer money,” Raskin said. “This was an issue quite unlike the issue of supervision.”
While Republicans took aim at Raskin, Democrats defended her. Democratic Senator Elizabeth Warren of Massachusetts pointed out during the hearing that Federal Reserve Chairman Jerome Powell, who is supported by multiple Republican senators, holds similar views on assessing climate risks in the financial sector.
During the hearing, Raskin appeared alongside fellow Federal Reserve nominees Lisa Cook and Philp Jefferson.
Cook, who is a professor at Michigan State University and holds a PHD from Berkeley, has also been the target of Republican attacks leading up to the confirmation hearing. GOP lawmakers have said she’s not qualified to serve on the Fed. Toomey pointed out in his opening statement she has only been a director at the Chicago Fed for several weeks.
Cook pushed back on the concerns.
“I certainly am proud of my academic background. I know that I have been the target of anonymous and untrue attacks on my academic record,” said Cook, who previously served on the White House Council of Economic Advisers.
If confirmed, Cook would be the first Black woman to serve on the Federal Reserve Board of Governors.
Currently, the path for Raskin and Cook to be confirmed is extremely narrow. Both need just a simple majority in the Senate. The Senate is split 50-50, giving Vice President Kamala Harris the power to break any tie. But with Senator Ben Ray Lujan recovering from a stroke, Democrats are down one vote for at least the next month. Republicans are also gunning for a few moderate Democrats to oppose the nominations.
Jefferson is the least controversial of Biden’s nominees for Republicans. Toomey stated during the hearing that he is qualified for the position he is nominated for.
