Sarah Bloom Raskin faces a narrow road to confirmation

Sarah Bloom Raskin’s past statements on climate regulation are stoking fierce Republican opposition to her nomination as Federal Reserve...


Sarah Bloom Raskin’s past statements on climate regulation are stoking fierce Republican opposition to her nomination as Federal Reserve vice chairman for oversight and could leave President Biden’s pick with a narrow path to confirmation.

Ms. Raskin, a former Fed and Treasury official who previously argued that financial regulators should control climate risks more diligently, met resistance during his hearing before the Senate Banking, Housing and Urban Affairs Committee on Thursday.

She was nominated alongside Lisa D. Cook and Philip N. Jefferson, economists vying for seats on the Fed’s Board of Governors. The three must leave the committee first, then must win the support of a majority of senators to gain confirmation. It is unclear whether Ms. Raskin, in particular, will overcome these obstacles.

“The margin here is slim to zero for her,” said Ian Katz, managing director of Capital Alpha Partners.

This is especially true if Senator Ben Ray Luján, a New Mexico Democrat who is recover from a stroke, is not present for upcoming votes on Fed nominations. A senior official for Mr. Luján said on Wednesday he was expected to make a full recovery and would return in four to six weeks barring complications.

If the Banking Committee hangs along party lines on Ms Raskin’s nomination, a majority of the 100 U.S. senators could vote to bring it before the committee. But unless Ms Raskin can win support from Republicans, that may have to wait until Mr Luján returns, because Democrats need the 50 senators who caucus with them and the deciding vote for the vice president if all Republicans are opposed. And even then, Ms. Raskin may need to enlist the support of centrist Democrats like Sen. Joe Manchin III of West Virginia to secure confirmation.

“I don’t expect her to get votes from Republicans on the committee,” Katz said, estimating she had less than a 60% chance of being confirmed. “It’s really, really close.”

Republicans interpreted Ms Raskin’s speech statements on climate-related regulation to mean she would use her perch at the Fed to deter banks from lending to oil and gas companies. The energy industry galvanized opposition to his nomination with lobbying pressure to thwart confirmation. Ms Raskin faced far less resistance banks what would watch.

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

Several Republican lawmakers referenced an opinion piece criticizing government support for fossil fuel companies that Ms Raskin wrote about The New York Times in 2020, as well as a position for Project union last year in which she argued that “all U.S. regulators can — and should — examine their existing powers and consider how they might be leveraged to mitigate climate risk.”

Ms Raskin struck a softer tone on Thursday, rebutting 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,” Ms. Raskin said repeatedly in response to questions. questions from senators. She also stressed that Fed policy-making was a collaborative process.

But these assurances may not appease its critics. Republicans, including Senator John Kennedy, pushed her on her views and Mr Toomey expressed his disbelief.

“This is one of the most remarkable cases of confirmation conversion I have ever seen,” Mr. Toomey said.

Ms. Raskin’s views on the climate weren’t the only thing Republicans were focused on.

Senator Cynthia Lummis, a Republican from Wyoming, asked if Ms. Raskin used her Fed connections to help secure a main Fed account for a fintech company, Reserve Trust, for which she was a board member. administration.

Ms Lummis said she “understood” that Ms Raskin had called the Federal Reserve Bank of Kansas City about the matter, which Ms Raskin neither confirmed nor denied during the hearing. The Kansas City Fed had no comment.

“Senator Lummis made innuendo without presenting facts to support her false assertions,” Chris Meagher, a White House spokesman, said after the hearing. The White House has not disputed that the Fed granted the Reserve Trust account while Ms Raskin was on its board.

Ms Raskin served on the board of Reserve Trust from 2017 to 2019. The company got a Fed approval charter in 2018. Main accounts allow companies to access to the infrastructure of the American payment system, allowing it to move money without partnering with a bank, among other advantages.

The company, which could not immediately be reached for comment, announces on its website that it “is the first fintech trust company with a Federal Reserve lead account”, and describes the benefits it brings. confers.

Mr. Lummis suggested that Ms. Raskin may have benefited financially from her participation in Reserve Trust. Ms. Raskin has cashed in shares of the company for more than $1 million in 2020, her husband recently updated financial information show. This transaction is accounted for as capital gains income on its own financial statements. Ms. Raskin is married to Rep. Jamie Raskin, a Democrat from Maryland.

It’s unclear how, or if, Ms Raskin’s private sector connections will influence her chances. Capital Alpha’s Mr Katz said that was unlikely to determine the outcome, but noted that “it’s not nothing” and that it “could gain traction”.

Senator Elizabeth Warren, a Massachusetts Democrat and critic of the revolving door between regulators and the private sector, appeared to hint at the issue during the hearing.

“I believe we need to look at the total qualifications record of a candidate,” she said. “But I’ve asked candidates in both Republican and Democratic administrations to uphold higher ethical standards.”

Some centrist Democrats seemed pleased with Ms Raskin. But a critical lawmaker, Senator Manchin, said Wednesday he had yet to study the nominees.

He added that he was “going to get into this” because he was “very concerned” about issues such as inflation.

A Harvard-educated lawyer, Ms. Raskin is a former assistant secretary in the Treasury Department and a former Fed governor, and she Also spent several years as Commissioner of Financial Regulation of Maryland.

Mr Toomey made it clear he also had reservations about Dr Cook, but other Republicans seemed inclined to support her, including Senator Kennedy. That means her nomination is likely to succeed unless she loses Democratic votes. Mr. Jefferson appears poised to clean up the Senate easily, with support from Mr. Toomey and others.

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.

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.

Dr Cook, Dr Jefferson and Ms Raskin are awaiting confirmation alongside Jerome H. Powell – for his renomination as Fed Chairman – and Lael Brainard, a Fed Governor who is the Fed’s pick. Biden administration for the vice presidency.

Sen. Sherrod Brown of Ohio, chairman of the committee, said Wednesday that the five nominees would face a key committee vote on Feb. 15, and that Sen. Chuck Schumer of New York, the majority leader, “knows act quickly” for a full floor vote.

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Newsrust - US Top News: Sarah Bloom Raskin faces a narrow road to confirmation
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