Who is Sarah Raskin, what happened with a $1.5 million stock sale, why is everyone so riled up about the potential Fed pick?
Is the latest Federal Reserve nominee really an environmental firebrand who wants to overhaul the U.S. central bank to exclusively tackle climate change? Probably not, but her confirmation hearing Thursday definitely had a lot of lawmakers asking questions along those lines.
Sarah Bloom Raskin—who served as a Fed governor and deputy secretary of the Treasury during the Obama administration—was in front of Congress on Thursday morning, along with President Joe Biden’s two other nominees for Fed governors, to secure the nomination for the role of Federal Reserve’s vice chair for supervision.
While she’s arguably one of the “most qualified people ever nominated for the Federal Reserve” according to Sen. Sherrod Brown, her nomination has proved controversial thanks to her previous statements in support of the federal regulators taking more action on climate change.
Here’s what you need to know:
So what does she want to do about climate change?
Over the years, Bloom Raskin has pointed out that the Fed and other federal regulators need to be conscious of the risk posed by climate change. Controversially, she’s advocated to limit the Fed’s investments in oil and gas.
“The decisions that the Fed makes today will go a long way to determining whether tomorrow’s economy is one that remains susceptible to more chaos and vulnerability or builds economic security and resilience,” she wrote in a May 2020 New York Times op-ed.
That has riled up Republicans, in particular, who say that Bloom Raskin would use bank regulation to impose policies they disagree with.
“Unelected officials like Ms. Raskin want to misuse bank regulation to impose environmental policies that Congress has refused to enact,” Senate banking committee ranking member Pat Toomey (R-Pa.) said Thursday during the hearing. “She’s repeatedly, publicly, and forcefully advocated for using financial regulation—including the Fed—to allocate capital and de-bank energy companies.”
But when asked about the Fed’s role on Thursday, Bloom Raskin specifically highlighted that Congress has provided the Federal Reserve with clear mandates, and that members should not be discouraging banks or any other federal regulators from lending to carbon-based fuels like coal, oil, or gas.
“I can’t state more emphatically than I already have, that it is not the role of the Federal Reserve to get engaged in favoring one sector [over another],” Bloom Raskin said Thursday during the hearing.
Bloom Raskin did note in her testimony, however, that to ensure the resilience of U.S. financial system, bank regulators need to say “attentive to risks no matter where they come from,” including those inside the financial sector, as well as those from nature and even cyberattacks.
“Bank supervisors must make sure that the safety of banks and the resilience of our financial system are never compromised in favor of short-term political agendas or special interest groups,” she said in her testimony.
What about that $1.5 million stock sale?
Others have attacked Raskin’s role as a board member for Denver-based fintech company Reserve Trust.
Reserve Trust received a coveted Fed master account, which provides access to the Fed’s payments system. It’s the first fintech trust company to get approval, which occurred while Bloom Raskin was at Treasury.
Bloom Raskin joined the board of Reserve Trust in 2017 and left in 2019, selling the stock she had acquired in the company for $1.5 million in 2020.
“Even in this town, that’s a lot of money for being on a company’s board of directors for two years,” Cynthia Lummis (R-Wy.) said Thursday.
Rep. Jamie Raskin (D-Md.), who’s married to the Fed nominee, included information about the sale in a financial disclosure report filed last August, but may have failed to do so properly, according to a Business Insider report.
It is not illegal for private citizens, or even lawmakers’ spouses, to buy and sell stocks. And Bloom Raskin denied anything improper and said she’s always been “very mindful of the rules.” She currently serves as a Duke University law professor.
Some lawmakers, including Sen. Elizabeth Warren (D-Mass.), argued that the controversy surrounding Bloom Raskin was ridiculous, pointing out that even current Fed Chair Jerome Powell and other Fed members have cited the risk of climate change.
“Asking the Fed to ignore climate risk is to ask the Fed to defy its congressional mandate. An institution responsible for the security of our financial system and the growth of our economy cannot blind itself to climate issues. We’re in a climate crisis,” Warren said.
“Perhaps the real problem here is that Professor Bloom Raskin isn’t willing to let Big Oil stand in the way of the Fed doing its job. The fossil fuel industry and their lobbyists and friends in Congress may not like that,” Warren added.
Last January, the couple disclosed that their son Tommy, 25, died by suicide after a long battle with depression. The Raksins have two grown daughters: Hannah Grace, a banker, and Tabitha, a teacher. Hannah Grace Raskin attended the hearing Thursday.
Despite an at-times contentious hearing, Bloom Raskin is expected to secure enough votes to be the next Fed supervisory vice chair.
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