February 02, 2022

Banking Committee Republicans Release Staff Report on Raskin’s Plan to “Reimagine” Financial Regulation to Save Us From an “Unlivably Hot Planet”

Washington, D.C. – U.S. Senate Banking Committee Republican staff today released a staff report highlighting Sarah Bloom Raskin’s, President Biden’s nominee for Vice Chair for Supervision at the Federal Reserve (the Fed), prior statements on how financial regulation should be “reimagined” to save us from an “unlivably hot planet.”

The staff report—Sarah Bloom Raskin In Her Own Words: “Reimagining” Financial Regulation to Save Us From an “Unlivably Hot Planet”—sheds light on how Ms. Raskin would use her role as Vice Chair for Supervision to abuse the Fed’s narrow statutory mandates by having the central bank actively engage in capital allocation and de-bank energy companies.

The report also compares Ms. Raskin’s position with that of Fed Chairman Jerome Powell, who stated during his January 11, 2022 nomination hearing that physical risk “in the form of extreme weather . . . doesn’t seem likely in the near term.” Powell went onto describe that the “real risk would be transition risk” caused by government policy—not weather events.

Ms. Raskin—in her own words—has gone even farther than Fed governor and climate regulation enthusiast Lael Braianrd when it comes to advocating for the Fed to take an activist role in combatting global warming. Asked by Senator John Kennedy (R-La.) in her nomination hearing whether “federal regulatory authorities should use their considerable power . . . to discourage private banks from lending money to oil and gas companies?” Brainard answered, “No.”

In an interview with CNBC in 2019, Sarah Bloom Raskin herself said that the Senate should consider a nominees’ prior statements in light of economic conditions. When discussing the former president’s potential nominees for the Fed, she said:

“I’ll tell you what I think the Senate should look for in looking at both of them. And I think they’re going to want to look at some of the prior statements that have been said. Um, you know, if a nominee wants to abolish the Federal Reserve, if a nominee wants to return us to a gold standard, um, if a nominee feels that tax cuts have long and sustained benefits for the economy, all of those of those kinds of prior statements, I think, are fair game for the Senate to look at. And the Senate’s going to look at it really in light of economic conditions. The conditions that the Senators know about in their own economies because, of course, there is a direct link between what monetary policy does and the economic prosperity that the Fed is supposed to be bringing about in every state, in every corner of every state. So that’s going to be the question that the Senators will face.”

With inflation at a 40-year high and gas prices up 50% over the last year, it is only appropriate—as Ms. Raskin has noted—that the Senate consider her prior statements advocating for financial regulators to choke off capital to fossil fuel companies.

As Ranking Member Pat Toomey (R-Pa.) said this morning on CNBC’s Squawk Box, policy decisions on issues such as climate change should be left up to elected officials who are accountable to the voters—not unelected Fed governors.

“Sarah Bloom Raskin, her candidacy as the Vice Chair for Supervision in some ways, it's a referendum on the idea of whether or not the Fed should do the legislative work of Congress and whether the Fed should be empowered to engage in policy decisions that have nothing to do with their mandate.

“[Ms. Raskin] has recently and repeatedly and expressly advocated that financial regulators generally and the Fed in particular, allocate capital away from the fossil fuel sector, for instance, because she thinks climate change is just such a serious thing that the Fed simply has to step up and do this. Now the problem is: embedded in any such action is all kinds of really important implicit decisions that are going to affect ordinary Americans every day. We see the way people are reacting to gas prices at the moment. That's not a decision to be made by unelected vice governors who never faced the voters. That's a tough, tough set of decisions.

“What we do about climate is a tough set of decisions that need to be hashed out through a politically accountable process, not the Fed. I think the Fed has already been wandering outside of its lane, the regional banks in particular, and I'm totally opposed to the idea that we would openly declare that the job of the Fed is to allocate capital.”

To read the staff report, click here.