March 29, 2022

Toomey on Senate Floor: Lisa Cook Will Further Politicize the Fed

Washington, D.C. – U.S. Senate Banking Committee Ranking Member Pat Toomey (R-Pa.) today urged his colleagues to vote against the motion to discharge Professor Lisa Cook, President Biden’s nominee for Federal Reserve Governor, from the Committee.

Senator Toomey expressed concern that Professor Cook will further politicize the Fed at a critical time, when inflation is at a 40-year high and the Fed is already suffering from a credibility problem because of its involvement in politics.

Ranking Member Toomey’s remarks, as prepared for delivery.

I rise today to speak on the nomination of Professor Lisa Cook to serve as a governor on the Federal Reserve Board.  

At stake with Professor Cook’s nomination is how the Federal Reserve will respond to one of the most pressing issues facing Pennsylvania and the nation.

Earlier this month, we learned that inflation hit a four-decade high of almost 8 percent. Prices are skyrocketing for gasoline, food, and rent. The amount Americans are paying for basic goods and services is going up faster than wages.

Under the guise of fighting this inflation, my colleagues across the aisle on the Senate Banking Committee have urged the swift confirmation of President Biden’s slate of nominees to the Federal Reserve board.

Chairman Brown has said that Biden’s nominees are “ready to get to work fighting inflation.” And yet, we still haven’t voted on the two nominees with unanimous Republican support and near-unanimous Democrat support.

Democrats know that even without confirming any of these nominees, the Fed has 8 out of 12 votes, which is more than enough to raise rates. And in fact, the Fed did so at its last meeting just two weeks ago.

So it is worth asking ourselves if these nominees are truly the “inflation fighters” that the White House claims they are. In my view, one nominee in particular—Professor Lisa Cook—dramatically fails this test.

First, Professor Cook has nearly zero experience in monetary policy. She does have a PhD in economics. However, not a single one of her publications concerns monetary economics.

The White House cites as her main qualification on U.S. monetary policy her appointment as a Chicago Fed director. But that appointment was made in January of this year—just two weeks before President Biden announced her nomination to be a Fed governor.

And Professor Cook made crystal clear in her conversation with me that she had not participated in any policy or decision-making so far in her term on the Chicago Fed. In fact, she described her role as limited to “filling out paperwork” for her new position. So, this appointment can hardly count as a qualification to serve as a Fed governor.

Professor Cook herself has acknowledged that her academic work on monetary issues is sparse. When asked to list her top few works on monetary policy for the Committee, she provided only one. It was a book chapter about Nigerian bank reforms in 2005.

What’s even more troubling is that, in addition to having no monetary policy experience, Professor Cook also appears to have no opinion at all on how the Fed should address inflation. Professor Cook repeatedly refused to endorse the Fed’s decision to pull back its ultra-easy money policy, and only did begrudgingly say that she agreed with the “Fed's path right now as we're speaking” at her nomination hearing in February.

Professor Cook’s answers to basic questions about what the Fed should do to tame inflation amount to nothing more than word salad. Professor Cook has continued to insist that she would need to be confirmed to the Fed before she can have a view on inflation because, in her own words, “we don’t have access to all the data that the Fed has” and “we don’t have access to […] the deliberations at the time they’re being made.”

These statements are bewildering for someone who has been nominated to address the most pressing inflationary threat in nearly two generations. To be clear: The Fed has no “secret” data, as Professor Cook alleges. In fact, monetary policy—including the recent 41 percent increase in the money supply—is very transparent.

And if Professor Cook is counting on Fed economists to help her make a prediction about inflation, then—first of all, they’ve been wrong about inflation for at least two years, and second, then what is she on the Fed for in the first place?

Every economist in the country right now has an opinion about inflation. Every other nominee to the Federal Reserve has an opinion about inflation. And certainly every Pennsylvanian has an opinion about inflation.

Professor Cook’s claim—made at her nomination hearing just last month—that “we have to be patient with the data” on rising consumer prices shows that she will continue to be tolerant of letting inflation ravage American consumers.

This brings me to my second point. Professor Cook’s history of extreme left-wing political advocacy and hostility to opposing viewpoints also makes her unfit to serve on the Fed.

As I’ve said numerous times, it is exceptionally important to keep politics out of the money supply. But unfortunately, we’ve seen the encroachment of politics at the historically independent Federal Reserve.

There are people on the left, including in the Biden administration, advocating that the Fed use its supervisory powers to resolve complex political issues, like what to do about global warming, social justice, and even education policy. These are important issues. But they’re wholly unrelated to the Fed’s limited statutory mandates and expertise.

Professor Cook’s record indicates that she is likely to inject further political bias into the Fed’s work—at a time when hyper-focus on inflation and adherence to the Fed’s dual mandate is at its most critical.

In over 30,000 public tweets and retweets, Professor Cook has supported race-based reparations, promoted conspiracies about Georgia voter laws, and sought to cancel those who disagree with her views, such as publicly calling for the firing of an economist who dared to tweet that he opposed defunding the Chicago police.

After Banking Committee Republican staff highlighted these tweets for the public’s attention, Professor Cook blocked the Banking Committee Republican Twitter account—one day before her nomination hearing. Apparently Prof. Cook not only realizes how inflammatory her own tweets are, but also has no regard for the Senate’s constitutional responsibility to vet her public statements.

The Fed is already suffering from a credibility problem because of its involvement in politics and departure from its statutorily proscribed role. I’m concerned that Professor Cook will further politicize an institution that must remain apolitical. I urge my colleagues to vote against the motion to discharge Professor Cook.