Finance

GOP senators to block vote on Biden Fed picks

Republicans on the Senate Banking Committee will block votes on President Biden’s five Federal Reserve nominees, the top GOP senator on the panel announced Tuesday.

In a Tuesday statement, Sen. Pat Toomey (R-Pa.) said GOP members of the Banking panel will not show up for scheduled votes on Biden’s choices to serve on the Fed board, including Fed Chair Jerome Powell. A Senate committee needs at least one member from the minority party to be able to conduct official business, including the approval of presidential nominees.

Toomey said Republican senators decided to block votes on all of Biden’s nominees after Democrats refused to hold back Sarah Bloom Raskin’s nomination to be Fed vice chair of supervision. While Toomey said Raskin’s policy views were “alone disqualifying,” he argued the committee needed more information about her previous employment she refused to provide before advancing her nomination to the Senate floor.

“Important questions about Ms. Raskin’s use of the ‘revolving door’ remain unanswered largely because of her repeated disingenuousness with the Committee,” Toomey said.

“Until basic questions have been adequately addressed, I do not think the Committee should proceed with a vote on Ms. Raskin,” he added.

The Banking panel was scheduled to vote Tuesday on Raskin’s nomination along with four others: Powell’s renomination as Fed chair, Lael Brainard’s nomination to be Fed vice chair, and the nominations of Lisa Cook and Phillip Jefferson to serve as members of the Fed board of governors. The panel was also scheduled to vote on Sandra L. Thompson’s nomination to be director of the Federal Housing Finance Agency.

Under Senate rules, nominees must be recommended by the committees with jurisdiction over their agencies before the full chamber can vote on the confirmation. If Republicans refuse to show up to Tuesday’s vote, the Banking panel will not be able to proceed.

Sen. Sherrod Brown (D-Ohio), the Banking panel’s chairman, said 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.”

“Any actions to delay this vote will hurt workers, their families, and our recovery,” Brown continued.

While Raskin was unlikely to receive little, if any, Republican support, tying her fate to Biden’s entire slate of nominees could ramp up pressure on moderate Democrats to oppose her. It also raises questions about how far Republicans are willing to go to block Biden nominees in a Senate where Democrats rule by narrow margin.

“Committee Republicans aren’t seeking to delay her vote. We’re seeking answers,” Toomey said. His office also cited Brown’s decision to boycott the Senate Finance Committee’s 2017 votes on former Treasury Secretary Steven Mnuchin and former Health and Human Services Secretary Tom Price over concerns about their previous business dealings.

Toomey claimed Raskin, who served on the Fed board during the Obama administration, refused to answer questions about her work with Reserve Trust, a financial company she advised from May 2017 through August 2019. Republicans have raised concerns about her attempt to help Reserve Trust receive a charter to access the Fed’s payment transmission system after an initial failed attempt, along with her decision to sell her shares in the company for $1.5 million in 2020. 

The Federal Reserve of Kansas City said this month Reserve Trust was given access after making adjustments to its business model and that the bank did not deviate from its normal review process. 

Raskin has also been fiercely criticized by Republican senators for calling on the Fed to reject fossil fuel companies from pandemic emergency lending programs set up in 2020. She had also urged federal regulators to use more power to fight climate change through the financial system, particularly through new rules meant to protect against climate-related financial risks.

As Fed vice chair of supervision, Raskin would lead oversight of major banks and spearhead its regulatory agenda. Republicans argue Raskin has proved she would use her immense power to steer capital away from fossil fuel companies, but she explicitly ruled out doing so during her confirmation hearing.

“It is inappropriate for the Fed to make credit decisions and allocations. Banks choose their borrowers, not the Fed,” Raskin said. She added the Fed should not “choose winners and losers. Doing so is not the proper institutional role of the Fed.”

Several current Fed officials, including Powell and Brainard, have also shot down using bank rules to penalize fossil fuel companies.

The Republican blockade on Biden’s Fed picks is not likely to have an immediate impact on the bank’s efforts to steer the U.S. economy out of high inflation and supervise national banks. The Fed was expected to charge ahead with a series of interest rate hikes after inflation hit the highest rate in more than 40 years in 2021, and the bank is still in the early stages of studying how to measure climate-related financial risks.

Even so, the delay will hinder Biden’s goal of shifting the Fed’s long-term trajectory toward a greater focus on financial disparities and economic inequality.

“Some Senate Republicans are 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,” said White House press secretary Jen Psaki in a statement.

Psaki also called Raskin “one of the most qualified individuals to ever be nominated to the Federal Reserve,” who “made the strongest ethics commitments in the history of the Fed.

“Even after she’s made extensive disclosures to the Banking Committee, Senator Toomey has continued to promote false allegations that have already been shot down by ethics experts, the Kansas City Fed, the founder of Reserve Trust, Sarah Bloom Raskin herself, and more.”

The delay may also add to a growing backlog of pending nominees with less than year until Democrats could lose control of the Senate in the midterm elections.

Updated at 1:22 p.m.

Tags Jen Psaki Jerome Powell Joe Biden Pat Toomey Sherrod Brown Steven Mnuchin Tom Price

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