Raskin withdraws Fed vice chair nomination

Sarah Bloom Raskin, nominee to be vice chairman for supervision and a member of the Federal Reserve Board of Governors, is seen during the Senate Banking, Housing and Urban Affairs Committee confirmation hearing on Thursday, February 3, 2022
Roll Call/Pool

Sarah Bloom Raskin, who President Biden nominated to serve as Federal Reserve vice chair of supervision, withdrew from consideration Tuesday after three moderate senators effectively blocked her path to confirmation.

Raskin sent a letter to Biden on Tuesday asking him to withdraw her nomination amid “relentless attacks by special interests,” The New Yorker first reported Tuesday. Her withdrawal comes one day after Sens. Joe Manchin (D-W.Va.), Susan Collins (R-Maine) and Lisa Murkowski (R-Alaska) announced their opposition to her nomination.

“Despite her readiness—and despite having been confirmed by the Senate with broad, bipartisan support twice in the past — Sarah was subject to baseless attacks from industry and conservative interest groups,” Biden said in a Tuesday statement.

“Unfortunately, Senate Republicans are more focused on amplifying these false claims and protecting special interests than taking important steps toward addressing inflation and lowering costs for the American people.”

Raskin served as deputy Treasury secretary and a member of the Fed board of governors during the Obama administration. She was unanimously confirmed to both positions by the Senate and also served at the State of Maryland’s chief financial supervisor.

While Raskin had broad support from former Fed officials and little resistance from the banking industry, advocates for oil and gas companies rallied against her nomination over her views on climate-related financial risks.

Raskin in 2020 urged the Fed not to offer emergency loans to fossil fuel companies struggling to stay afloat amid the pandemic and criticized investing in oil and gas companies. She has also urged regulators and banks to pay closer attention to ways climate change can upend the financial system, drawing fierce opposition from the fossil fuel industry.

Raskin’s views on climate drew immediate opposition from Senate Republicans. GOP lawmakers have fiercely criticized the Fed and other financial regulators for paying special attention to the ways climate change poses financial stability risks, and claimed Raskin would use the Fed to defund the industry.

“Many in and outside the Senate are unwilling to acknowledge the economic complications of climate change and the toll it has placed, and will continue to place, on Americans,” Raskin wrote to Biden.

“Addressing the transition of the economy as it grapples with the effects of climate change is critical to the future of American prosperity. I stand with the vast majority of financial regulators and central banks in the United States and abroad recognizing these facts.”

During her confirmation hearing last month, Raskin said it would be inappropriate for the Fed to impose regulations meant to steer funding from one sector of the economy to another. She also drew a distinction between her opposition to pandemic emergency loans for fossil fuel companies and her responsibilities overseeing bank regulation if confirmed to the Fed.

Even so, GOP senators insisted Raskin would use her Fed perch to penalize banks who funded the fossil fuel industry. 

“The Senate’s bipartisan rejection of Sarah Bloom Raskin’s nomination sends a powerful message to the Fed, and to all financial regulators, that it is not their job to allocate capital or stray from their mission to pursue extraneous or politically charged campaigns. The Biden administration should nominate in her place an individual who will focus exclusively on implementing the Fed’s statutory mandates of stable prices, full employment, and supervision of bank holding companies,” said Sen. Pat Toomey (R-Pa.), ranking Republican on the Senate Banking Committee, in a Tuesday statement.

Raskin would have needed unanimous support from all 50 Democratic senators to be confirmed without any Republican crossover votes. But her path to confirmation closed when Manchin announced Monday morning he could not vote for Raskin because of her views on climate. 

Murkowski and Collins — two GOP moderates who often cross the aisle — also dashed any chance of Raskin breaking through with their opposition Monday afternoon.

The White House and Democratic senators who stood behind Raskin called her the victim of a smear campaign waged by powerful oil and gas interests. They, along with Raskin herself, also blasted Republican senators who blocked a banking panel vote to advance her nomination and Biden’s other four Fed picks.

GOP senators prevented Biden’s Fed picks from reaching the Senate floor by boycotting a committee vote on the five nominees last month. Without a quorum of senators present, the Banking panel was unable to tee up any of the nominees for a full confirmation vote.

Republicans on the Banking panel said they refused to attend the hearing because Raskin allegedly provided misleading and incomplete information about her previous employment with Reserve Trust, a Colorado financial services company. Raskin advised Reserve Trust after it unsuccessfully sought access to the Fed’s national payments system, helping the company eventually land approval from the Federal Reserve of Kansas City.

There is no evidence Raskin or the Kansas City Fed violated the law or skirted the typical approval process to give Reserve Trust access to payment rails. Reserve Trust said Raskin advised the company on ways to adjust its business model to pass Fed vetting.

Even so, Republicans refused to attend a vote on her nomination without further information from Raskin. Democratic senators noted she answered more than 180 written follow-up questions from Republican senators after her hearing. 

“Unfortunately, too many of my colleagues ignored the broad, bipartisan support from community bankers, top economists, cybersecurity experts, state banking regulators, consumer advocates, and so many others. Instead, they fell for talking points written by the oil and gas industry,” said Sen. Sherrod Brown (D-Ohio) 

“Republicans engaged in a disingenuous smear campaign, distorting Ms. Raskin’s views beyond recognition and made unsubstantiated attacks on her character. Committee Democrats were united, and we did our jobs.”

Raskin’s withdrawal will now clear the path for the Senate to vote on Biden’s other Fed nominations, including the renomination of Fed Chair Jerome Powell, a Republican first appointed to the position by former President Trump.

Biden also nominated Fed Governor Lael Brainard, a Democrat, to serve as Fed vice chair and economists Phillip Jefferson and Lisa Cook to serve as members of the Fed board.

Updated at 4:22 p.m.

Tags Donald Trump Jerome Powell Joe Biden Joe Manchin Lisa Murkowski Pat Toomey Sherrod Brown Susan Collins

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