Sarah Bloom Raskin, vice chairperson nominee for oversight and a member of the Board of Governors of the Federal Reserve, gestures during a hearing of the Senate Committee on Banking, Housing and Urban Affairs on Capitol Hill in Washington, D.C., the United States, February 3, 2022.
Ken Cedeno | Reuters
Senate Republicans peppered the Federal Reserve nominee for chief banking regulator Thursday with questions about whether she would steer the institution into climate change and other areas outside of her mandate.
President Joe Biden has appointed Sarah Bloom Raskin to the post of vice chair for banking supervision, arguably the industry's most important regulator.
Although Raskin said that previous writings of hers that cast fossil fuels in an unfavorable light would not lead her to get the Fed "into the business of picking winners and losers," the GOP members of the Senate Banking Committee were not convinced.
"Regarding Mrs. Raskin, I must say that this is one of the most remarkable cases of confirmation conversion I have ever seen, although she does not see the contradiction of what she said today compared to the things she said recognizes and has written for years," said senior Republican Senator Patrick Toomey of Pennsylvania.
Toomey specifically referenced comments made by Raskin that talked about allocating capital away from fossil fuel companies. In a May 2020 article for The New York Times, titled "Why Is the Fed Spending So Much Money on a Dying Industry?" Raskin advised the central bank against using its emergency lending powers, which it put in place at the start of the Covid-19 pandemic, to: to help big energy companies.
“Climate change threatens financial stability; addressing it can create economic opportunity and more jobs,” Rasking wrote at the time. "The decisions the Fed is making on our behalf should work toward a stronger economy with more jobs in innovative industries — not supporting and enriching dying ones."
When repeatedly asked if her writings meant she would urge banks not to lend money to fossil-fuel companies, Raskin said it was outside the Fed's purview.
Fed officials have said they are working with banks to update their planning to include financial implications of climate-related events. There are currently no plans to include these provisions in stress tests for large institutions.
"It's not the role of the Federal Reserve to gamble on favoritism of any sector," Raskin said. "I'm saying I consider it outside the bounds of the law. The Federal Reserve was established by Congress with specific mandates, and as an attorney I live within those mandates.”
The hearing was also held to interview economists Lisa Cook and Philip Jefferson, who also nominated Biden to fill vacancies on the Fed's Board of Governors.
Cook, in particular, faced questions about her views on inflation and her resume, which Senator Bill Hagerty, R-Tenn., accused Cook of embellishing.
"Today's hearing is not just about reviewing them," Toomey said. "It's really about the independence of the Fed and whether or not we give up a core area of our democracy."
But committee chairman Sen. Sherrod Brown, D-Ohio, said the Republican criticism was politically fueled. He noted that Raskin, who has previously served as Fed governor, weathered previous confirmation hearings with bipartisan support.
"We've seen a coordinated effort by some to portray them as radical," Brown said. "This characterization requires an exposure to common sense."
The committee is expected to vote on the nominations later this month, along with those of current Fed Chair Jerome Powell and Lael Brainard, a governor Biden wants to promote to vice chair.