President Biden has nominated Sarah Bloom Raskin as vice chair for supervision at the Board of Governors of the Federal Reserve System (Fed). If confirmed, Raskin would likely take action to threaten the political independence of the Fed, refocusing Fed investment on left–wing policy aspirations rather than economic growth and job security.
When she was nominated earlier this month, Raskin was immediately criticized by Republicans for past statements on climate change, a hot–button topic for the Biden administration. In an article for the Financial Times in January 2021, Raskin, who described fossil fuel as “a dying industry” in a New York Times op–ed a year earlier, called upon financial regulators to “reimagine capital as a tool for accelerating… the transition to a world of net-zero carbon emissions,” and later wrote the following last September for Project Syndicate:
All U.S. regulators can – and should – be looking at their existing powers and considering how they might be brought to bear on efforts to mitigate climate risk… They need to ask themselves how their existing instruments can be used to incentivize a rapid, orderly and just transition away from high-emission and biodiversity-destroying investments.
This progressive outlook, which Raskin herself has characterized as “thinking creatively” about climate solutions, has drawn the ire of Senate Republicans, including Senator Pat Toomey (R–Pa.), who warned the Senate Banking Committee of confirming any nominee who could easily overstep the narrow statutory mandate of the Fed to have the central bank directly interfere in capital allocation.
“Raskin has specifically called for the Fed to pressure banks to choke off credit to traditional energy companies and to exclude those employers from any Fed emergency lending facilities,” Toomey remarked, a move which could endanger hundreds of thousands of workers at a time when a Covid–related economic recession continues to worsen. For this reason, lawmakers from energy producing states should be deeply concerned by Raskin’s nomination.
This comes as another of President Biden’s nominees to the Fed’s board, Lisa Cook, has come under fire for comments characterizing former President Donald Trump as a fascist, and Republican voters as uneducated “NASCAR folks.”
The degree of bias shown by these two candidates should disturb regulators, legislators, and the public alike. Encouraging the adoption of politically–charged policies is divisive and could influence the Fed to weigh in on certain issues far outside of its remit. The Biden administration, taking cues from its dismal approval numbers, should seek to appoint qualified, nonpartisan figures to Fed positions in the future, as a means of preventing the politicization of the Fed and safeguarding the American economy.