Thu. Jul 7th, 2022

Joe Biden’s pick to lead financial regulation at the Federal Reserve withdrew her nomination on Tuesday, after centrist Democrat Joe Manchin joined Republicans in opposing her confirmation.

In a letter to the US president first reported by The New Yorker, Sarah Bloom Raskin, a former Fed board member who previously served as deputy secretary of the US Treasury, blamed “relentless attacks by special interests” for her decision.

Republicans on the powerful Senate banking committee, which initiates the Fed’s confirmation process, had launched a campaign to block her advancement to become the Fed’s vice-chair for supervision after taking issue with her calls for regulators to more proactively address financial risks related to climate change.

Earlier this month, Conservative committee members refused to provide the support necessary to proceed with not only Raskin’s confirmation, but also the White House’s four other nominees for top jobs at the central bank, including Jay Powell, who is poised to take on a second term. as chair.

Their efforts were aided on Monday by Joe Manchin, the Democratic senator from West Virginia, who said he would not support Raskin’s nomination.

Manchin is not a member of the banking committee, but he wields outsized influence in an upper chamber of Congress that is split, 50-50 between Democrats and Republicans, with Vice-President Kamala Harris able to cast a tiebreaking vote. All Fed nominees need to be confirmed by a simple majority of the Senate.

“If I step away from this confirmation process, there can be no excuse left for a continued boycott of the Constitution’s ‘advice and consent’ process and the Senate’s corresponding refusal to attend to our nation’s real economic needs,” Raskin wrote in her letter to Biden.

The president issued a statement on Tuesday praising Raskin, saying she “knows better than anyone how important the Federal Reserve is to fighting inflation and continuing a sustainable economic recovery” but had been “subject to baseless attacks from industry and conservative interest groups”.

“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,” Biden added.

Raskin had previously expressed support for rules that require big banks with exposure to fossil fuel-intensive industries to hold more capital, as well as limitations on the types of companies the Fed will support with emergency measures.

In her letter to Biden, she defended her position, which she characterized as not “novel or radical”.

“Chairman Powell has recognized climate change as a significant risk that needs to be incorporated into the supervisory process,” she said. “Any vice-chair for supervision who ignored these realities – which are manifesting every day across this country – would be guilty of gross dereliction of duty.”

Raskin also took aim at accusations raised by Pat Toomey, the top-ranking Republican on the committee, and other lawmakers about her tenure as a board member at Reserve Trust, a fintech group that successfully opened a “master account” with the Fed that gave it direct access to the central bank’s payments systems.

They said she was not sufficiently transparent about whether she had used her government connections to help the company open the account.

“Rather than a productive and informed discussion about climate and financial risk, the country was treated to diversionary attacks on my ethics and character,” Raskin wrote.

“These attacks have been fully refuted and have no basis in law or fact,” she added.

In a statement on Tuesday, Toomey said: “The Senate’s bipartisan rejection of Sarah Bloom Raskin’s nomination sends a powerful message to the Fed. . . that it is not their job to allocate capital or stray from their mission to pursue extraneous or politically charged campaigns. ”

Sherrod Brown, the Democrat who chairs the Senate banking committee, accused Republicans of engaging in a “disingenuous smear campaign” and said the committee would proceed swiftly to confirm the remaining four Fed nominees.

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