Sarah Bloom Raskin, President Joe Biden’s nominee to lead the Federal Reserve’s regulatory work, told US lawmakers on Thursday that she believes banks require strict oversight but that it is not her job to tell them how and where to lend.
Raskin attempted to persuade the Senate Banking Committee to confirm her as the next vice chair for supervision of the United States Federal Reserve, a position that oversees the central bank’s regulatory agenda. She testified alongside Lisa Cook and Philip Jefferson, two of Biden’s Fed governor nominees.
Raskin, a former Fed governor and senior Treasury Department official during the Obama administration, if confirmed, will take on a broad agenda at the Fed, with Democrats eager to reestablish tougher rules across the financial border. While progressives applauded Raskin’s nomination, she will also need the support of moderate Democrats in order to be confirmed by the Senate’s narrowly divided majority.
Raskin pledged in her testimony to be a vigilant, all-encompassing bank watchdog, monitoring everything from internal bank risks to cyberattacks.
“Bank supervisors must ensure that the safety of banks and the resilience of our financial system are never jeopardized in the name of short-term political agendas or special interest groups,” she testified. “They must remain alert to risks, regardless of their source.”
Raskin also addressed concerns raised by some Republicans and business groups that she would take a tough stance against oil and gas companies as the Fed develops tools to assess financial risks associated with climate change.
While Raskin has urged regulators to be wary of the financial risks posed by climate change, she was clear in her testimony that it was not the Fed’s role to dictate bank lending. Rather, it should ensure that banks are adequately prepared for all risks.
“The role does not entail directing banks to make loans only to specific sectors or to refrain from making loans to specific sectors,” she explained. Senator Pat Toomey, the top Republican on the banking committee, has called Raskin’s nomination “unacceptable,” and has stated that the Fed should not take the lead in policing climate change.
“Unelected officials like Ms. Raskin want to use bank regulation to impose environmental policies that Congress has refused to implement,” he said.
In a letter sent to lawmakers ahead of the hearing, the U.S. Chamber of Commerce, the nation’s top business lobby, took the unusual step of raising concerns about her climate change stances.
Raskin’s supporters are quick to point out the Harvard-educated lawyer’s extensive regulatory experience, which includes stints at the Fed and Treasury in the aftermath of the 2007-2009 financial crisis and recession, as well as her time as the state of Maryland’s chief financial regulator.
And the Fed is already laying the groundwork to assess the threat that climate change poses to the financial system, forming internal teams to assess the risk and pressuring banks for information on how they are mitigating climate-related risks to their balance sheets.
Senator Sherrod Brown, the Democratic chairman of the Senate Banking Committee, said Raskin is the most qualified nominee he has ever seen for such a regulatory post, noting that she has previously been easily confirmed for senior positions at the Fed and Treasury. He predicted that she would be confirmed alongside Cook and Jefferson.
Brown previously said he would like the committee to advance the trio, along with the re-nomination of Fed Chair Jerome Powell and the elevation of Fed Governor Lael Brainard to the U.S. central bank’s vice chair position, on Feb. 15.