For a moment, it looked like the Federal Reserve would be in full force at just the right time to make key monetary policy decisions at its next policy meeting in March. The US central bank has to deal with rising inflation. Currently, there are three open positions in the Fed’s seven-member daily leadership, and they remain vacant for longer than expected.
On Tuesday, Republicans blocked the nomination of three new directors, as well as the reappointment of the Federal Reserve’s chair and vice chairman. They did so by not appearing on the Senate Banking Committee, where Democrats have a slim majority. Because of their absence, there were not enough senators to legally conduct the vote.
The Republican headline is Sarah Bloom Raskin. The attorney will become the deputy chief of the division that oversees banks at the Federal Reserve. Raskin was already a member of the Federal Reserve’s Executive Committee from 2010 to 2014, which is made up of seven members. Together with five members of the regional Federal Reserve offices, they make up the rate setting committee that sets monetary policy.
revolving door policy
The fact that Raskin’s candidacy was still unanimously approved in 2010 suggests that Republicans were outraged not by a lack of managerial qualities or experience. After her first term at the Federal Reserve, Raskin also served as Deputy Secretary of the Treasury in the Obama administration for three years. It’s about time that she’s in the private sector then that will make her unfit for a position at the Federal Reserve.
After 2017, Raskin took a seat on the Supervisory Board of the Reserve Trust in exchange for the stock package. The company announces on its website that in 2018, it was the first FinTech company of its kind to gain access to the central bank’s payment system. Republicans believed, thanks to pressure from Raskin, who then made good use of her network as a former senior official. They see this as evidence of Washington’s hateful revolving door policy between government and business.
In written testimony, Raskin — who sold her Reserve Trust shares in 2020 for nearly $1.5 million — said she had no recollection of calling the Kansas Fed office, which had jurisdiction over the matter. The central bank itself says in a statement that it is usual for the Fed to communicate with an organization that wants to have such a master account.
In the background is another reason for Republican opposition to Raskin. Her previous statements indicate that she believes financial regulators should be allowed to use their power to tackle climate change. According to her opponents, Raskin will discourage banks at the Federal Reserve from lending to oil and gas companies.
The appointment of the three nominated directors – along with Raskin, Lisa Cook and Philip Jefferson – appears to have been blocked. The Banking Committee’s Republican leader, Pat Toomey, says the vote on Cook and Jefferson could go ahead soon, as well as the reappointment of Fed Chair Jerome Powell and Vice President Lyle Brainard, provided that Raskin be postponed. First you need to provide more information and clarification about its position in the Reserve Trust.
The Democratic chair of the Banking Committee, Sherrod Brown, did not listen. He wants to approve all appointments at once. Negotiation is the logical path. Only one Republican must appear for the vote to be valid.
Meanwhile, Raskin has already appeared. At the request of Democratic Senator Elizabeth Warren, she promised not to work in the financial sector for at least four years once she became a Fed chauffeur.
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