President Biden's Embattled Federal Reserve Pick Withdraws Nomination

Sarah Bloom Raskin was nominated to the top banking regulator post but faced criticism over her stance on climate change and lending to oil companies.

President Biden's Embattled Federal Reserve Pick Withdraws Nomination
Bill Clark / Pool via AP

Sarah Bloom Raskin withdrew her nomination Tuesday to a position on the Federal Reserve’s Board of Governors after a key Democrat had joined with all Senate Republicans to oppose her confirmation.

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Sen. Joe Manchin announced Monday that he opposed Raskin's confirmation, and all Republicans in the evenly-split 50-50 Senate had indicated that they planned to block her nomination for the position of the Fed's top banking regulator.

Republicans have argued that Raskin would use the Fed’s regulatory authority to discourage banks from lending to oil and gas companies. Democrats, as well as many banking executives, countered that Raskin’s views aren’t out of the mainstream and said she simply wants the Fed to consider the risks that climate change poses to banks, insurance companies and other financial firms.

President Joe Biden, who nominated Raskin in January, said she had “unparalleled experience” in areas like cybersecurity, climate change, and consumer protection. The president asserted in a statement that “Sarah was subject to baseless attacks from industry and conservative interest groups."

Raskin's nomination had been stuck in the Senate Banking Committee after Republicans last month unanimously refused to vote on it in an effort to prevent her being approved on a party-line vote.

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Sen. Pat Toomey from Pennsylvania, the senior Republican on the committee, also charged that Raskin inappropriately used her connections with the Fed to benefit a Colorado financial technology company, Reserve Trust. Raskin joined Reserve Trust in January 2017, after the firm had applied for a “master account” at the Fed, which would enable it to quickly transfer large sums of money 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. The Kansas City Fed said it had approved Reserve Trust’s second application because the company changed its business model.

Raskin denied that she had taken any inappropriate action. But Toomey complained that she did not sufficiently respond to committee Republicans' questions on the matter.

In her letter to President Biden withdrawing from consideration, Raskin wrote, “It was — and is — my considered view that the perils of climate change must be added to the list of serious risks that the Federal Reserve considers as it works to ensure the stability and resiliency of our economy and financial system.”

Chair Jerome Powell, who enjoys broad support among congressional Republicans, has taken steps to increase the Fed’s scrutiny of climate change and how it may affect the safety and soundness of banks.

Raskin previously served as Fed governor from 2010 through 2014 and then as the deputy Treasury secretary. She was approved unanimously by the Senate to both positions.

The president has also nominated Lael Brainard, a Fed governor, for the central bank’s No. 2 post, and economists Lisa Cook and Philip Jefferson for positions on the board.

Additional reporting by The Associated Press.