WASHINGTON – Republican members of the Senate Banking Committee boycotted a vote Tuesday on President Joe Biden's five nominees to the Federal Reserve, delaying indefinitely the confirmation of Chair Jerome Powell to a second four-year term.
Democrats control the committee, but because no Republican attended the session, votes couldn't take place under the panel's rules.
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The boycott stemmed from Republican opposition to Sarah Bloom Raskin, a former Fed governor and deputy Treasury secretary under President Barack Obama whom Biden picked to be the Fed's top banking regulator. Sen. Pat Toomey of Pennsylvania, the senior Republican on the committee, argued that Raskin had provided insufficient answers about her work as a board member for a fintech firm. Toomey and other Republicans have asserted that Raskin inappropriately used her connections to the Fed to benefit the company.
Committee Republicans have also objected to Raskin's past statements on climate change, in which she urged the Fed to consider risks to the financial system from weather disasters and other impacts of rising temperatures in its bank oversight. Toomey has charged that Raskin would use the Fed's tools to discourage banks from lending to oil and gas companies.
The delay in the committee's consideration of the nominees reflects an unusual degree of partisanship surrounding Raskin, a sign that the nation's political polarization is now engulfing the Fed, traditionally a relatively nonpartisan institution. In 2010, when she was first appointed to the Fed's Board of Governors, Raskin was confirmed unanimously by the Senate.
“Important questions about Ms. Raskin’s use of the ‘revolving door’ remain unanswered largely because of her repeated disingenuousness,” Toomey said in a statement Tuesday. “Her fitness to serve, her judgment, and her probity are of utmost importance because Ms. Raskin is being considered for a 10-year term at the nation’s independent central bank and foremost financial regulator.”
Sen. Sherrod Brown, the Ohio Democrat who chairs the committee, denounced his Republican colleagues for refusing to attend the committee meeting and vote.
“Ms. Bloom Raskin has been the subject of an unrelenting smear campaign and fear mongering by (Toomey) and Republicans — something that’s become all too common,” Brown said.
The committee was scheduled to vote Tuesday on Powell, Raskin and Lael Brainard, a Fed board member whom Biden has nominated to the vice chair position. Votes on economists Lisa Cook, who would be the first Black woman to serve on the Fed's board, and Philip Jefferson, who would be just the fourth Black man, were also scheduled.
Powell is serving as Fed chair on an acting basis after his term expired Feb. 4. The Fed's seven-member board of governors currently has three vacancies.
Brown and the Biden White House argued that with inflation rising it was important to approve all the nominees. The Fed's missions are to keep unemployment low and stabilize prices.
White House press secretary Jen Psaki said the boycott was “totally irresponsible at a time when it’s never been more important to have confirmed leadership at the Fed to help continue our recovery and maintain price stability."
Brown said before the hearing that he would not separate out Raskin's nomination and vote on the four other nominees, a process that could allow them to proceed to the Senate floor for final approval.
“We're not going to let them cherry-pick,” Brown told reporters on Capitol Hill. “We're not going to play that game.”
Brown and the other Democrats on the committee gathered at the scheduled time for the vote, but no Republicans were present. After criticizing their absence, Brown said he would reschedule it for another time. He provided no further details.
Raskin joined the Reserve Trust, a Colorado-based fintech firm, in January 2017 after serving as a Fed governor and as deputy secretary of the Treasury. In 2016, the firm applied for a “master account" at the Fed, which would enable it to transfer money using the Fed's payment systems without going through a bank. Reserve Trust's application was turned down in mid-2017.
But the company reapplied and won approval the next year from the Federal Reserve Bank of Kansas City. Raskin had contacted the Kansas City Fed in 2017 after the company's application had been denied.
Sen. Cynthia Lummis, a Republican from Wyoming, raised the issue earlier this month at a hearing to consider Raskin's nomination. Lummis complained that financial companies in her state, many of which have connections to cryptocurrencies, have been unable to win approval for master accounts.
The Kansas City Fed, in a statement last week, said it had approved Reserve Trust's second application because the company changed its business model.
“The Kansas City Fed did not deviate from its review process in evaluating this request,” the statement said.
Toomey, who has criticized other regional Fed banks for addressing issues, such as racial economic disparities, that he considers outside their mandates, last week accused the Kansas City Fed of “stonewalling" his requests for more information. He said last week that Congress should consider reforming, or even eliminating, the 12 regional Fed banks. The banks were included in the 1913 law that created the Federal Reserve to provide broad regional input in the Fed's policy decisions.
Raskin may still win approval by the broader Senate, along with Biden's four other nominees. Sen. Jon Tester, a committee Democrat from Montana, a state with oil and gas interests, told Yahoo Finance on Monday that he would vote for Raskin and predicted that she would eventually be confirmed to the position.