Lawmakers sparred with one another and President Joe Biden’s Federal Reserve nominees in a sometimes contentious Senate Banking Committee hearing on Thursday morning.
The president has an unusual chance to nominate three members to the central bank’s policymaking Board of Governors, as the result of an unfilled vacancy during Donald Trump’s presidency. Biden has said he wants to increase diversity at the Fed, and his trio of nominees includes two women and two Black nominees: Sarah Bloom Raskin, a former Fed governor and deputy Treasury Secretary during the Obama administration, is the nominee for vice chair for supervision — the Fed’s most high-profile enforcement position.
The other two nominees are Philip Jefferson, chief academic officer at Davidson College and a former research economist at the Federal Reserve Board, and Lisa Cook, an economics and international relations professor at Michigan State University. Cook was elected earlier this year to the board of the Federal Reserve Bank of Chicago. If confirmed, Cook would be the first Black woman on the Fed’s Board of Governors.
The main point of contention was Raskin’s progressive leanings with regard to climate change.
“I don’t think she necessarily lost any supporters… but I’m not sure she actually got any converts either,” said Brandon Barford, partner at Beacon Policy Advisors.
Committee Ranking Member Pat Toomey, R-Pa., and other Republican Senators referenced a May 2020 opinion piece, in which Raskin criticized emergency Fed programs implemented in the early months of the pandemic to backstop businesses when the economy abruptly shut down. The New York Times column ran with a title and subhead that read, “Why Is the Fed Spending So Much Money on a Dying Industry? It should not be directing money to further entrench the carbon economy.”
In the column, Raskin said the Fed’s emergency lending programs should have been off limits to fossil fuel firms, writing, “Even in the short term, fossil fuels are a terrible investment.”
“Raskin has said the quiet part out loud,” Toomey said in his opening statement, charging that Raskin seeks to expand the Fed’s dual mandate in a way that would distort financial markets and harm the economy.
In the hearing, Raskin said her viewpoint on the role of banking regulations and climate policy was taken out of context and labored to draw a distinction between emergency pandemic capital funding and everyday banking regulation.
“She is going to need every Democrat,” said Karen Shaw Petrou, managing partner of consulting firm Federal Financial Analytics. While Raskin had been confirmed to previous government roles on a bipartisan basis, Petrou said the stakes are higher this time around.
“In those positions, she was less important, and you didn’t have the third rail of climate change with the kind of constituent and ideological interests that were in evidence today,” she said.
Despite the criticisms, though, experts said it was unlikely that Raskin’s appointment would be blocked. In such a closely divided chamber, Barford said Raskin’s testimony could be chalked up as a win. “It’s a good hearing when you maintain your base of support and you don’t close any new doors.”
While Democrats hold a razor-thin margin in the evenly divided Senate, the financial services industry has expressed, if not full-throated, at least solid support for Raskin. Following her nomination, both the American Bankers Association and the Financial Services Forum issued statements in support of her appointment.
“For Raskin, it will be at least slightly bipartisan,” Barford said. “The financial services community, particularly the trade groups and veteran lobbyists — they didn’t mobilize against her,” he said.
While Raskin was the primary focus among Committee members on both sides of the aisle, both Jefferson and Cook also faced scrutiny. According to experts, both are expected to be confirmed on a bipartisan basis, although Cook faced sharper questions.
“I think Philip Jefferson is a shoo-in — he will be confirmed quite easily,” Petrou said.
Cook has been criticized on the right for being outspoken on social media advocating for progressive politicians and positions. “I think Cook will have some defections because there’s been some questions about her use of social media to advocate for progressive causes. That’s always controversial,” Barford said.
Some GOP lawmakers also were critical of Cook’s academic background and professional credentials. Committee Member Kevin Cramer, R-N.D., called Cook “fundamentally not qualified” in a Fox Business interview. In Thursday’s hearing, Sen. Bill Hagerty, R-Tenn., said Cook didn’t have the relevant experience and also cast doubt on the veracity of her credentials, citing unspecified mischaracterizations.
Barford dismissed those criticisms, pointing out that Jerome Powell — the current Fed chair who has been nominated by presidents of both parties to serve in that role — was not an economist by trade.
“The number of people on the board recently who have not been monetary Ph.D economists has been growing,” he said, calling it “pretty absurd” to hold Cook to a standard to which even the head of the central bank wouldn’t meet.
The Fed has a long history of being consensus-driven, apolitical and deliberate in its actions. Even with an influx of new voices — and opinions — experts said this commitment is unlikely to be shaken.
“I don’t think you’ll see Sarah Bloom Raskin trying to break up the banks or fundamentally restructure them,” Petrou said.
“She managed to get the right organizations to either hold their criticism and or endorse her nomination and I think that’s a key attribute to be able to successfully navigate this sort of process,” Barford said. “To still have bank trade groups not vociferously throwing bombs at her nomination is an impressive feat.”
Source: | This article originally belongs to Nbcnews.com
