WASHINGTON (AP) — Pushing back on criticism, a key candidate for the Federal Reserve Board of Governors told a Senate panel Thursday that she won’t make it harder for an industry to get bank loans.
President Joe Biden has named Sarah Bloom Raskin, a former Fed governor and assistant treasury secretary, as the Fed’s vice chair for oversight, the nation’s top banking regulator. But Republicans have accused Bloom Raskin’s previous statements on climate change of suggesting she would use her position at the Fed, if confirmed, to discourage banks from lending to oil and gas companies.
The White House disputed that view and on Thursday, in remarks before the Senate Banking Committee, Bloom Raskin said she would not be able to take such action in the post, if confirmed.
“It is inappropriate for the Fed to make credit decisions and allocations,” Bloom Raskin said. “Banks choose their borrowers, not the Fed.”
The Senate panel is also considering nominations of Lisa Cook and Philip Jefferson to the Fed board. If approved, they would vote on Fed interest rate policies and financial system oversight. Cook is the first black woman to be named to the Fed board, and Jefferson would be only the fourth black man on the board if confirmed.
Jefferson appeared to garner broad support from senators from both parties, while Cook received bipartisan praise but also harsh criticism from Sen. Pat Toomey of Pennsylvania, a senior GOP member of the committee.
Toomey and some other Republicans were unconvinced by Bloom Raskin’s comments and will vote against his nomination.
“This is one of the most remarkable cases of confirmation conversion I’ve ever seen,” Toomey said, suggesting Bloom Raskin changed his mind to win Senate support.
Toomey focused on several writings by Bloom Raskin. Two years ago, in a New York Times opinion column, Bloom Raskin called oil and gas a “dying” industry and criticized the Fed’s willingness to prop up lending to fossil fuel companies in as part of its emergency support for the economy during the pandemic recession. .
And at a conference last year, Bloom Raskin suggested that financial regulators should support “a quick, orderly, and just transition away from high-emitting assets.”
Environmental groups argue that Bloom Raskin supports analysis of the potential threat climate change poses to banks and insurance companies as part of the Fed’s mandate to keep the financial system ‘safe and sound’ .
Republican Senate Leader Mitch McConnell of Kentucky harshly criticized Bloom Raskin in a Senate speech on Thursday, suggesting widespread GOP opposition to his nomination. To be confirmed, Bloom Raskin would need the unanimous support of Democrats or winning over some Republicans.
Sen. Jon Tester, a Democrat from Montana, an oil and gas state, appeared sympathetic to Bloom Raskin’s views during the hearing.
“It’s extremely important that the Fed get all the information it can when dealing with risks to our financial system,” Tester said. “It’s pretty obvious that climate change has to be part of the information you collect.”
Oil and gas trade associations have criticized Bloom Raskin’s nomination, although not all have explicitly opposed it. The Chamber of Commerce, in a letter to the committee last week, urged senators to simply “raise several important issues” during the hearing.
Banking trade groups generally did not object to Bloom Raskin’s nomination. She served as Maryland’s chief banking regulator from 2007 to 2010 and has been praised by leading Maryland bankers for her collegial approach.
Senator Cynthia Lummis, a Republican from Wyoming, raised a new question about Bloom Raskin’s nomination during the hearing. She accused Bloom Raskin, after leaving her post as deputy treasury secretary in 2017, of joining the board of directors of a fintech startup, Reserve Trust, and helping her get an “account Principal” at the Fed, a sought-after designation that allows corporate financiers to earn interest on the reserves they keep at the central bank.
Lummis said Reserve Trust is the only fintech start-up to receive such a designation, and that Bloom Raskin incorrectly contacted the Kansas City Federal Reserve in 2017 on Reserve Trust’s behalf. Bloom Raskin left the company in 2019 and in 2020 sold shares of Reserve Trust for $1.5 million.
“Something is wrong with the way it played out,” Lummis said.
“I want to make it very clear…I’ve been very careful with the rules,” Bloom Raskin replied.
The Biden administration has accused Lummis of engaging in “innuendo.”
“Sarah Bloom Raskin has always taken her ethical obligations very seriously,” White House spokesman Chris Meagher said.
An administration official, speaking on condition of anonymity to discuss the matter freely, said the company received the account because it went through a lengthy regulatory process and complied with rules on these apps.
Elsewhere, Cook was attacked by conservative commentators who suggested she was unqualified.
Toomey said Cook engaged in “far left advocacy” and “supported race-based reparations, promoted conspiracies regarding Georgia’s election laws, and sought to strike down those that weren’t d agreement with his opinions”.
Senator Sherrod Brown, the Ohio Democrat who chairs the committee, later responded, “The attacks on Dr. Cook are heinous.
“They were launched on the far-right blogosphere to discredit a highly respected economist with substantial experience in monetary policy,” Brown continued. “She has a doctorate. in economy. Many other board governors have never had this.
Cook is an economist at Michigan State University and a former member of President Barack Obama’s White House staff. She obtained her doctorate in economics. from the University of California at Berkeley and holds degrees from Spelman College and the University of Oxford.
On Thursday, Cook said she views tackling inflation, which is currently at its highest level in four decades, as the Fed’s top priority.
“I agree with President Powell that our most important job is to fight inflation,” Cook said. “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.”
Jefferson, an economist and dean of Davidson College in North Carolina, also said he sees rising inflation as a major risk to the economy.
“The Federal Reserve must remain alert to this risk and ensure that inflation declines to levels consistent with its objectives,” Jefferson said.
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