Feb 3, 2022 - Economy & Business

Biden Fed nominees brace for tense Senate hearing

Sarah Bloom Raskin
Sarah Bloom Raskin, nominee for Fed vice chair. Photo: Andrew Harrer/Bloomberg via Getty Images

The Senate Banking Committee's confirmation hearing Thursday for three Biden nominees to the Federal Reserve will be a high-stakes and potentially tense affair.

Why it matters: If one were to falter, it would undermine President Biden's push to remake the Fed to be more concerned about climate change and racial equality.

  • Republican senators are likely to aggressively question one nominee, Sarah Bloom Raskin, about her views on bank regulation and climate change, and another, Lisa Cook, about her qualifications.

Between the lines: The opposition to Raskin's nomination as vice chair of supervision is unusual.

  • It's not coming from the banking industry, with which she had constructive relationships in previous roles at the Fed and the Obama administration's Treasury Department.
  • Rather, it's being driven by fossil fuel industries worried she'd seek to choke off their access to capital.

Raskin's opponents have particularly keyed on to a May 2020 article in which she opposed the Fed's emergency pandemic lending facilities supporting the oil, gas and coal industries.

  • They argue she wouldn't merely monitor climate-related risk on bank balance sheets in shaping regulation but actively try to prevent financial institutions from lending to those industries.

Opposition to Cook would be more personal.

  • A handful of conservative economists have argued she's underqualified to be a Fed governor because her academic research is mostly not focused on monetary economics.
  • Cook, professor of economics and international relations at Michigan State, would be the first Black woman to become a Fed governor.
  • She worked in the Obama administration's Council of Economic Advisers and has done extensive research on the economic consequences of racial discrimination.

A third governor nominee, Philip Jefferson, appears to face smooth sailing.

Ultimately, the only question is whether anything surfaces in the hearings that might break Democratic unanimity on the nominees' confirmation.

  • To date, no Democrats have publicly wavered on supporting them.
  • By contrast, Biden's unsuccessful nominee to be a top bank regulator, Saule Omarova, attracted opposition from some Democrats and an onslaught of attacks from the financial industry and its allies.
  • Omarova ultimately withdrew.

The bottom line: All three nominees are on track to be confirmed, but only if they can deliver effective performances during their confirmation hearing — and keep all 50 Democratic senators behind them.

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