WASHINGTON — Republicans on the Senate Banking Committee boycotted and delayed a Tuesday vote on the White House’s nominees for the Federal Reserve, targeting President Joe Biden’s pick for banking regulator.
The GOP opposition has coalesced on Sarah Bloom Raskin, a former Federal Reserve governor who has pledged to focus on the ways climate change threatens financial stability and the overall economy. More recently, Republicans have zeroed in on her time on the board of a Colorado payments firm, which got access to a Federal Reserve payments systems during Raskin’s tenure on the firm’s board.
Despite the focus on Raskin, Tuesday’s boycott halts progress on filling vacancies on the seven-seat Federal Reserve Board, including the confirmation process for Biden’s renomination of Fed Chair Jerome Powell, who has broad support among Republicans and Democrats.
Republicans have zeroed in on Sarah Bloom Raskin’s tenure on the board of a Colorado payments firm, alleging a breach in ethics. Ken Cedeno/Pool via AP
“Last week, I told Chairman Brown that Republican Committee members would agree to proceed with a markup on all outstanding nominations except that of Sarah Bloom Raskin,” Sen. Pat Toomey, R-Pa., said in a statement Tuesday, ahead of the meeting, referring to Senate Banking Committee Chairman Sherrod Brown, D-Ohio.
“All senators – not just Banking Republicans – deserve straightforward and honest answers from Ms. Raskin before having to cast a vote on her nomination,” Toomey added. “Her fitness to serve, her judgment and her probity are of utmost importance because Ms. Raskin is being considered for a 10-year term at the nation’s independent central bank and foremost financial regulator. This isn’t a garden-variety political appointment.”
The nominations stand to be a new test for the 50-50 Senate, which has operated since January 2021 under a carefully negotiated power-sharing deal. Under that agreement, the full Senate can vote to discharge nominations that have been subject to a tied committee vote. But Republicans can block votes from happening in Senate committees, which are also divided evenly between the parties, by refusing to attend, thus denying a quorum.
It remains to be seen whether Brown will eventually hold separate votes for the other Fed nominees – or holds firm on the full slate.
Without their Republican colleagues, Democrats on the Banking Committee held an “unofficial” roll call vote on the Fed nominees, with multiple legislators expressing frustration that Republicans opted to boycott Tuesday’s session, rather than voting against Biden’s nominees.
“They’re preventing us from addressing an issue that is affecting every single one of our families in our state,” Sen. Catherine Cortez Masto, D-Nev., said. “Right now we are jut trying to move [the nominees] out of committee and move them forward so the American public can see we are focused on the needs of this country.”
In 2017, Democrats on the Senate Finance Committee, including Brown, boycotted a committee vote for Trump’s nominees to run the Treasury Department and Department of Health and Human Services.
Republicans have long criticized the Fed and White House for not moving fast enough to stop inflation, which has risen to its highest level in 40 years. But they are also moving to block Biden’s moves to fill open spots on the Fed board as it grapples with soaring inflation and the pandemic’s ongoing consequences for the economic recovery. Biden has also nominated Fed governor Lael Brainard to be the Fed’s vice chair, and economists Lisa Cook and Philip Jefferson to be Fed governors.
Earlier on Tuesday, Brown told reporters that Democrats on the committee still planned to go ahead with the vote, and that he was “still hopeful one or two [Republicans] will show up.” When that did not happen, Brown said he would delay a vote on the nominees.
Brown separately issued a stern statement rebuking his Republican colleagues.
“Today, Ranking Member Toomey chose to abdicate his duty to the American people and put our economic recovery at risk, instead of doing his job and showing up to vote on Ms. Bloom Raskin, Dr. Cook, Dr. Jefferson, Gov. Brainard, and Chair Powell’s nominations,” Brown said in a statement. “Americans depend on us to get these nominees on the job as soon as possible. If my colleagues are as concerned about inflation as they claim to be, they will end the theatrics and show up today to do their jobs.”
The White House also defended Raskin’s nomination and disputed allegations that she compromised ethics. In a statement to The Post, White House press secretary Jen Psaki Senate Republicans were “playing politics with the American economy by blocking a vote on the Chairman of the Federal Reserve and an entire slate of well-qualified nominees.”
“Such an extreme step would be totally irresponsible at a time when it’s never been more important to have confirmed leadership at the Fed to help continue our recovery and maintain price stability,” Psaki said.
Toomey has also criticized the central bank and the Fed’s network of regional banks for their research and attention to climate change and racial inequity – areas that Toomey says are beyond the Fed’s narrow mandate. Yet Republicans have generally been more supportive of Biden’s other nominees, especially Powell.
On Tuesday, Senate Minority Leader Mitch McConnell, R-Ky., said he would be meeting with Powell later in the day but expressed concern over Biden’s other nominees.
“The Fed has got a big job ahead of it in trying to tackle inflation. And I think there’s a lot of skepticism that many of these nominees are not up to the job,” McConnell said.
GOP attention on Raskin ratcheted up since her confirmation hearing, when she was questioned by Sen. Cynthia Lummis, R-Wyo., about her time on the board of a Colorado payments firm, Reserve Trust. Raskin joined the Reserve Trust board after her time as a Fed governor, where she served from 2010 to 2014, and as deputy secretary to former president Barack Obama’s Treasury Department, where she served from 2014 to 2017.
In 2017, the Kansas City Fed denied the Colorado firm access to what’s known as a Fed master account, which gives banks direct access to the Fed’s payment systems. But Reserve Trust was then granted access a year later. During the confirmation hearing, Lummis asked Raskin whether she used personal contacts from her regulatory background to help Reserve Trust secure its account.
Raskin, during the hearing, repeatedly denied any impropriety. And last week, the Kansas City Fed issued a letter outlining its decision to grant Reserve Trust an account.
The Kansas City Fed said that before 2018, Reserve Trust did not meet the proper requirements to be granted access to an account. But after the firm changed its business model, among other changes to state banking law, the Kansas City Fed approved the request.
Still, Republicans on the committee say they have not received sufficient clarity on this part of Raskin’s record.
“The Senate has an obligation to fully vet all nominees to ensure they meet the highest ethical standards,” Sen. Tim Scott, R-S.C., said in a tweet. “Ms. Raskin repeatedly failed to provide clear & comprehensive responses to @BankingGOP’s questions. Until she does, the committee shouldn’t proceed [with] a vote on Ms. Raskin.”
In the run-up to her nomination, Democrats had urged Biden to tap a regulator with a deep legal background and focus on climate change’s risks to the financial system. In addition to focusing her recent work in academia on climate issues, Raskin has called on regulators to examine how they can address climate change in their work.
During her confirmation hearing, she outlined her approach to the Fed’s regulation and supervision of banks, saying that banks choose their borrowers – not the Fed – and that it would be inappropriate for the Fed to make credit decisions and allocations. Raskin also said that any actions from the Fed would have to be within its defined mandate, as opposed to encroaching on turf meant for elected lawmakers.
“I understand the role. I understand the law,” Raskin said at her hearing earlier this month.
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