Finance

Toomey hits Fed over ‘obsession with race’

Sen. Pat Toomey (Pa.), the Senate Banking Committee’s top Republican, sent letters to three of the Federal Reserve’s regional banks complaining about their “obsession with race,” which he said was part of a “highly politicized social agenda unrelated to monetary policy.” 

“It is not the proper role of the Federal Reserve to be engaging in political advocacy,” he wrote in separate letters to the chairs of BostonAtlanta, and Minneapolis‘s Federal Reserve banks. 

“As the nation’s central bank, the Federal Reserve has an important, nonpartisan mission and statutory mandate: to ‘promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates,’” he added, citing the law that governs the Federal Reserve.

Last summer, following the murder of George Floyd, a Black American, at the hands of Minneapolis police, Federal Reserve Chairman Jerome Powell gave a speech on racial inequality noting that the unemployment rate for Black and Hispanic people is regularly higher that of white people.

Treasury Secretary Janet Yellen, a former Fed chairwoman herself, has also called for monetary policy that takes into account issues such as race and gender, saying that persistent inequalities among certain groups held back the economy as a whole.

In his letters, Toomey pointed to a series of studies, papers and blog posts from each of the banks examining race in the economy, many of which he said “suffered from severe bias” for assumptions that racism was ubiquitous and required government intervention to fix. 

“Some may welcome these events as useful or needed discussions, but it is perplexing as to why they would be undertaken by a regional Federal Reserve Bank,” Toomey said, adding that while racism was “abhorrent,” the subject of race and the economy was “fraught with ideological assumptions and interpretations.”

Toomey requested both written materials and briefings on the matter in the second week of June.

A spokesperson for the Atlanta Fed said the bank had received the letter and that “we look forward to discussing with him how better understanding racial inequality helps the Federal Reserve reach its mandate of maximum employment and ensure economic gains are widely experienced across the population, regardless of race.”

The letters follow a year of intense reckoning on race in the United States sparked by Floyd’s murder and the wave of social unrest that followed. 

President Biden has made a point of including race as a factor in nearly every part of his expansive agenda.

The push for a more focused conversation and policy on race, however, has also sparked a backlash among critics that say it has gone too far.

In last year’s election, Republicans made up ground in the House after running against slogans such as “defund the police” and pushing back on views they said painted the entire country as racist.

Updated at 1:14 p.m.

Tags Fed Federal Reserve Janet Yellen Joe Biden Monetary policy Pat Toomey Racism

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