Senate Republicans launched a scorch-earth attack this week on Sarah Bloom Raskin, the White House’s nominee to be the Federal Reserve’s vice chair of supervision, painting her as a radical for her widely shared view that climate change threatens the global economy.
Rather than voting no at Tuesday’s planned vote on whether to advance Raskin and two other Fed nominees to the full Senate, the 12 Republicans on the Senate Banking Committee staged a boycott, denying the panel’s Democratic majority the quorum needed to take that procedural step.
On Wednesday, 10 more GOP senators called on the White House to withdraw Raskin’s nomination, describing her as an “activist” bent on “manipulating markets” in ways that “will harm all Americans” in a letter, a copy of which HuffPost obtained.
If confirmed, Raskin, 60, would become one of the world’s most powerful bank regulators. The role was created after the Great Recession to guard against future financial meltdowns, and though the financial industry largely welcomed the nomination of a seasoned and familiar regulator who previously served as deputy treasury secretary and on the Fed’s board of governors, it’s the oil and gas industry that’s fueling the Republican assault.
Raskin, who is married to Rep. Jamie Raskin (D-Md.), entered the industry’s crosshairs in March 2020, when, in testimony before the House Select Committee on the Climate Crisis, she called for new federal rules requiring investors to disclose the risk that climate change poses to assets. She then urged U.S. regulators to carry out the kind of climate “stress tests” ― models to determine how a financial institution’s assets gain or lose value if, for example, a natural disaster upends supply chains or a government policy to cut emissions renders fossil fuel reserves worthless ― that the Bank of England and European Central Bank were already performing.
Two months later, she argued in a New York Times opinion piece that the money the Fed was spending to prop up fossil fuel companies amid the pandemic “not only misdirects limited recovery resources but also sends a false price signal to investors about where capital needs to be allocated.”
She effectively argued for taking a U-turn on the Trump-era policy. Instead of favoring fossil fuel companies in loans from the Fed, boost energy companies that decarbonize their operations.
“Her views are in the mainstream,” said Steven Rothstein, managing director of the Ceres Accelerator for Sustainable Capital Markets, a program under the Ceres green investor advocacy group. “There are over 100 central banks around the world that are part of the Network for Greening the Financial System. They’re all saying climate is a risk. Our current chair of the Federal Reserve says climate is a risk.”
Yet while Fed chair Jerome Powell’s statements acknowledge climate change’s financial risks, he has yet to propose any corrective measures as specific as those Raskin has put forward.
Climate-concerned progressives lauded her and urged President Joe Biden to name her treasury secretary or, at the very least, as the Treasury Department’s climate czar. But when the White House ultimately named her to the Fed role in January, the industry that stood to suffer the most from the policies she had floated now targeted her as an opponent.
Raskin could not implement policy unilaterally as one member of the Fed’s board of governors. In a speech to a conference last summer, she also tempered expectations about what kinds of policies could even work in the U.S., telling a European interviewer that requiring climate-vulnerable companies to keep certain amounts of capital on hand at all times is a concept that “does not have much traction on this side of the pond.”
Still, shortly after her nomination last month, the U.S. Chamber of Commerce, which for years denied the very reality of climate change, offered a rare rebuke of a Fed nominee, warning in a public letter that Raskin might “direct capital away from certain industries that are politically disfavored or direct capital towards industries that are politically favored.”
The American Petroleum Institute, the oil and gas industry’s biggest lobby in the U.S., echoed the sentiment.
“We remain concerned about Sarah Bloom Raskin’s past statements regarding the oil and natural gas industry,” Frank Macchiarola, API’s senior vice president of policy and regulatory affairs, said in an emailed statement. “We believe it would be inappropriate to use the Federal Reserve as a mechanism to restrict capital to our sector which could ultimately undermine efforts to deliver affordable and reliable energy while addressing the climate challenge.”
The American Energy Alliance, a fossil fuel advocacy group funded by the petrochemical billionaire Charles Koch, accused Raskin of singling out the oil and gas industry because it was “unwoke.”
A HuffPost analysis of campaign donation data found that the dozen Republicans on the Senate Banking Committee received more than $8.3 million in combined donations from the oil and gas industry, with an average of nearly $697,000. The senators are Pat Toomey (Pa.), Richard Shelby (Ala.), Mike Crapo (Idaho), Tim Scott (S.C.), Mike Rounds (S.D.), Thom Tillis (N.C.), John Kennedy (La.), Bill Hagerty (Tenn.), Cynthia Lummis (Wyo.), Jerry Moran (Kan.), Kevin Cramer (N.D.) and Steve Daines (Mont.).
The 10 additional senators who signed the letter to the White House include some of the other biggest recipients of oil donations, such as Sen. Ted Cruz (R-Texas) and James Inhofe (R-Okla.). In the letter, they say that confirming Raskin risked the “potential abuse of power to inflict harm upon the traditional fuel industry.”
In a letter of its own, the nonpartisan consumer advocacy group Better Markets accused the Republican senators of having “misleadingly cherry-picked and distorted” Raskin’s record.
“Ms. Raskin’s actual statements and views on climate align with Fed Chair Powell, former Fed Vice Chair for Supervision Randy Quarles, the biggest banks on Wall Street, financial industry leaders, and others,” Dennis Kelleher, Better Markets’ co-founder and president, said in a statement. “While these ideological and, at times, apparently poll-driven political attacks may play well with some base voters, they have no place in what should be a fact-based confirmation process.”
The White House declined a HuffPost request to interview Raskin.
An Emerging Consensus
The oil and gas industry and its legislative allies have in recent years begun parroting the language that social justice activists use to describe discrimination or access to health care.
As a growing number of cities require new buildings to install electric appliances and boiler systems, nearly two dozen states have prohibited their municipalities from banning natural gas use for cooking and heating, casting the legislation as protecting consumer choice. Meanwhile, the American Legislative Exchange Council, the right-wing policy shop, in the past year started promoting model bills to state lawmakers banning “discrimination” against fossil fuel companies by requiring state comptrollers and treasurers to withdraw government funds from banks, insurance firms and investment companies that do not invest in fossil fuels.
The push coincides with mounting warnings that continued investment in fossil fuel infrastructure could create a dangerous financial bubble.
In October, the Financial Stability Oversight Council ― the federal entity established as part of the same post-recession Dodd-Frank Act reforms that created the position to which Raskin was nominated ― issued a landmark report on climate change. The document found that global warming poses financial threats on numerous fronts, and, perhaps most jarringly, that the United States’ growing dependence on natural gas for electricity and heat could represent one of the nation’s biggest vulnerabilities.
The Federal Reserve Bank of San Francisco warned a year ago that climate change “will result in economic and financial losses for many businesses, households, and governments” and said “the uncertainty about the severity and timing of these losses” was a risk unto itself.
In January 2020, BlackRock, the world’s largest asset manager, wrote in its annual letter to CEOs that it would be “increasingly disposed to vote against management and board directors when companies are not making sufficient progress on sustainability-related disclosures.” That July, Citigroup pledged to start measuring companies by their compatibility with the warming scenario outlined in the Paris climate accords. JPMorgan Chase made a similar commitment that October.
The Revolving-Door Sideshow
Raskin’s views on climate are central to the opposition against her. But Toomey, the ranking Republican on the Senate Banking Committee, accused her of lobbying the Kansas City Fed branch on behalf of a financial tech firm whose board she briefly joined months after leaving the Treasury Department in 2017. The Wall Street Journal editorial board called it evidence of a corrupt “revolving door” deal in which the tech firm, Reserve Trust, hired Raskin to do its bidding.
But the story, which Toomey cited to the Kansas City Fed leadership, was quickly disputed. Colorado’s state bank regulator said the Fed branch “misrepresented” the facts of what happened, explaining that Reserve Trust’s successful appeal to be considered a bank by the Fed came after the company changed its business model and won approval from state regulators, not as a result of Raskin’s influence. Reserve Trust’s co-founder wrote in a letter to the editor published in the Journal that Raskin “had no role whatsoever” in gaining the company’s Fed approval.
Raskin and other Fed nominees have pledged to wait four years before taking any job with a company that provides financial services.
Advocates called the whole “scandal” a sideshow to pad the climate-fueled criticism of Raskin. They also said there was a double standard at play just months after the vice chair and two regional Fed leaders were implicated in an actual ethics scandal in which officials working on the Fed’s pandemic bailout programs traded stocks that benefited from those very policies. The move prompted new ethics rules, unveiled this week.
“We are, of course, concerned that Raskin was involved in all-too-common revolving-door work on behalf of a fintech firm,” said Jeff Hauser, founder of the Center for Economic and Policy Research’s Revolving Door Project. “But after Republicans have ignored a historic Fed scandal… it’s hard to get too worked up about it.”