Biden to appoint Sarah Bloom Raskin as Fed banking regulator
If confirmed by the Senate, Ms. Raskin, a former Fed governor, would become the vice president for central bank oversight, the most influential government overseer of the U.S. banking system.
Mr. Biden also plans to nominate two economists for other seats on the Fed board: Lisa Cook, a professor of economics and international relations at Michigan State University; and Philip Jefferson, professor and administrator at Davidson College in North Carolina.
The three picks would complete Mr. Biden’s remake of the Fed Board, following his decision in November to offer a second term to Fed Chairman Jerome Powell and appoint Fed Governor Lael Brainard, as vice-chairman of the Fed.
If all of Mr. Biden’s nominees win Senate approval, Ms. Raskin and Ms. Brainard will succeed senior officials chosen by President Donald Trump. Biden appointees would hold five of the seven seats on the board. Four positions would be held by women.
The appointments of Ms Cook and Mr Jefferson, who are both black, would help Mr Biden deliver on his promise to improve diversity at the top of the central bank, which in its history has had just three black members at the helm. board of directors, all men. The most recent was former Fed Vice Chairman Roger Ferguson, who left the board in 2006.
Ms. Raskin’s nomination is likely to provide comfort to progressive Democrats, some of whom have opposed Mr. Biden’s nomination of Mr. Powell, a Republican first chosen for the top job by Mr. Trump. They called on the Fed to take a tougher stance in regulating big banks and a bolder approach to dealing with the financial risks posed by climate change.
But Ms. Raskin’s calls for the Fed to take a more proactive role on climate change could draw opposition from Republicans.
In a New York Times opinion piece in May 2020, Ms Raskin criticized the large-scale emergency loan support measures put in place by the Treasury and the Fed to help businesses during the pandemic because it thought they should have taken steps to prevent oil lending. and-gas concerns.
“Decisions the Fed makes on our behalf should contribute to a stronger economy with more jobs in innovative industries, not support and enrich those who die,” she wrote.
Sen. Patrick Toomey (R., Pa.) cited Ms. Raskin’s article as troubling during a Thursday confirmation hearing for Ms. Brainard. Ms. Raskin “explicitly advocated for the Fed to allocate capital by denying it to this underprivileged sector,” Mr. Toomey said.
With a tightly divided Senate, Mr. Biden needs either universal support from Democrats to confirm his nominees or support from some Republicans to defeat holdouts in his own party. Ms Raskin may be confirmed by the Senate but faces a “tight and contentious vote” with “maybe … a Republican or two on her side,” Ian Katz, financial policy analyst at Capital Alpha Partners, said in a statement. recent note to clients.
Ms. Raskin was confirmed by a Senate vote for her Treasury and Fed positions in 2010 and 2014, respectively.
At the Fed, Ms. Raskin has maintained a low profile on monetary policy, but has been deeply involved in behind-the-scenes work to draft rules implementing the 2010 Dodd-Frank financial regulatory overhaul.
In a speech in September 2009, Ms Raskin blamed the financial crisis on “deregulatory fervor that marginalized the interests of many” and said the recession had been “brought on by a combination of greed, weak regulation and weak app”.
Ms Raskin, who has a law degree from Harvard University and wrote her undergraduate thesis at Amherst College on monetary policy, served in the Obama administration as assistant secretary of the Treasury from 2014 to 2017 and as Fed Governor from 2010 to 2014. She was previously from Maryland. State Commissioner for Financial Regulation.
She is currently a law professor at Duke University and is married to Rep. Jamie Raskin (D., Md.). She has been a member of the board of directors of the investment company Vanguard Group since 2017.
Mr. Biden’s choices are unlikely to alter the Fed’s near-term monetary policy plans. Fed officials have strongly suggested in recent days that they are preparing to raise interest rates several times this year, starting in March, amid heightened concerns about the potential persistence of high inflation.
Strong demand for goods and disrupted supply chains have pushed inflation to its highest level in decades. Consumer prices rose 7% in December from a year earlier.
Last year, some progressive Democrats urged the White House to install board members who would not be in a rush to scrap stimulus. But the recent surge in inflation has changed that equation and made rate hikes more politically tolerable on both sides of the aisle.
“I don’t see any of these people being particularly monetary accommodative at this point,” said Adam Posen, president of the Peterson Institute for International Economics.
Mr. Jefferson, vice president of academic affairs and dean of faculty at Davidson College, has been an academic for most of his time since 1990, when he earned his doctorate in economics, specializing in monetary economics and finance, at the University of Virginia. He was a professor of economics at Swarthmore College from 1997 to 2019 and spent a year as an economist with the monetary affairs division of the Fed’s board in the 1990s.
Her research has focused on labor markets and poverty, including a 2008 paper that examines the economic volatility faced by African-American families and female-headed households and its relationship to declining volatility. of economic production. In 2005, he analyzed the costs and benefits of policies that promote a “high-pressure economy” to stimulate tighter labor markets, arguing that the latter outweighed the former.
In a 2018 interview with a Minneapolis Fed publication, Jefferson spoke about the importance of including more diverse voices in policy-making roles. “When you’re a person who represents diversity and you’re engaged in the conversation, it changes the nature of the conversation. We have to be seated around the table,” he said. “I think it’s critically important for public policy that we hear voices that represent diversity.”
Ms. Cook previously served as a senior economist on the White House Council of Economic Advisers in the Obama administration. She holds a doctorate in economics from the University of California at Berkeley and bachelor’s degrees from Spelman College and the University of Oxford.
She wrote her doctoral thesis on the underdevelopment of the Russian banking system after the collapse of the Soviet Union, a feature she attributed to weak property rights.
Ms Cook voiced support for Mr Biden’s economic agenda at a recent Fed conference on gender and the economy. Asked at a November panel to identify three policies that would be most effective in tackling discrimination and lack of opportunity, Ms Cook cited childcare and support for the elderly, paid family leave and infrastructure. All are included either in the bipartisan infrastructure package signed into law in 2021 or in social spending and climate legislation that passed the House but is stalled in the Senate.
The Fed’s regulatory agenda should include tackling the rapid rise of cryptocurrencies and the question of how aggressively the central bank should pursue the adoption of a digital dollar.
Another issue is how banks should treat the treasury bills and deposits they hold at the central bank within the capital requirements known as the supplemental leverage ratio. The Fed allowed a temporary pandemic-related reprieve to expire on capital requirements last year, but promised to consider a broader overhaul of the treatment of the ultra-safe asset rule.
—Paul Kiernan contributed to this article.
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