January 25, 2022

Toomey Raises Concerns Over Fed Nominees’ Lack of Geographical and Professional Diversity

Calls Out Raskin’s “Demonstrated Hostility” to Energy Sector

Washington, D.C. – U.S. Senate Banking Committee Ranking Member Pat Toomey (R-Pa.) is raising concerns over the lack of diversity in geography and professional experience in President Biden’s recent slate of nominees to serve on the Board of Governors of the Federal Reserve System.

Section 10 of the Federal Reserve Act mandates that “[i]n selecting the members of the Board, not more than one of whom shall be selected from any one Federal Reserve district, the President shall have due regard to a fair representation of the financial, agricultural, industrial, and commercial interests, and geographical divisions of the country.”

President Biden’s Fed nominees Jerome Powell, Lael Brainard, Sarah Bloom Raskin, and Philip Jefferson have all been nominated from locations within the Fed’s Fifth District.

In a letter to President Biden, Ranking Member Toomey wrote:

“Congress included this requirement to prevent the concentration of the Federal Reserve’s immense economic power within one region of the country. And further, Congress sought to ensure that our country’s diverse economy was well represented.”

“The legislative history of the Federal Reserve Act bolsters this interpretation. The author of the geographic diversity requirement explained the important rationale for having geographically diverse board members: ‘[T]hey must represent every section of this country. This board, if selected east of Washington, would know little and care less about the agricultural and other interests in the Western and Southern States.’ This concern is equally valid today, though one might replace the phrase ‘east of Washington’ with ‘inside the beltway.’ If the current slate were to be confirmed, a majority of board members would hail from the Fifth District (Richmond), with three residing in the Washington, D.C. metropolitan area, and a majority would be professors from academia.”

Senator Toomey also pointed out the Fed nominees’ lack of “fair representation” with regard to America’s diverse economy, particularly with no board member having experience in the U.S. energy sector. This is especially concerning as President Biden’s nominee for Vice Chair for Supervision, Sarah Bloom Raskin, has a documented history of hostility towards oil and gas companies.

“While a lack of expertise at the Federal Reserve Board in any particular industry is inevitable, the demonstrated hostility of one nominee, Sarah Bloom Raskin, towards a sector that supports employment for millions of Americans, is unacceptable,” Senator Toomey wrote. “In May 2020, Ms. Raskin called the country’s traditional energy sector ‘a dying industry’ and insisted the Federal Reserve should specifically preclude fossil fuel companies from accessing its emergency broad-based lending facilities, which were established to help restore liquidity to businesses and save jobs when credit markets froze during the COVID pandemic. She has also advocated for the Federal Reserve to pressure banks into choking off credit to traditional energy companies.”

To read Ranking Member Toomey’s full letter to President Biden, click here.