US Democrats and Republicans Clash at Raskin Fed Vice Chair Confirmation Hearing

Gonghwa "An act of opening Pandora's box... Undermining Fed independence"
Minju "Most qualified person for Vice Chair of Bank Supervision"

[Asia Economy Reporter Byunghee Park] On the 3rd (local time), the U.S. Democratic and Republican parties clashed at the Senate Banking Committee confirmation hearing for Sarah Bloom Raskin, nominee for Vice Chair of the Federal Reserve (Fed). The Republicans opposed Raskin's nomination, calling it an act of opening Pandora's box, while the Democrats praised Raskin as the most qualified person ever to serve as Fed Vice Chair responsible for bank supervision.

According to Bloomberg and other sources, at the confirmation hearing, nominee Raskin took a more conciliatory stance than before to persuade Republican lawmakers. However, Republican members criticized her by pointing out the change in her attitude.

Raskin has emphasized strong bank regulation and that the Fed should play a role in enabling banks to respond to the emerging climate change crisis. Concerns have been raised that if Raskin assumes office, oil and gas companies may find it difficult to secure funding from banks. The U.S. Chamber of Commerce unusually sent a letter to Congress on the 27th of last month, urging that Raskin's stance on climate change be confirmed during the confirmation hearing.

While Raskin stated that strict bank supervision is necessary, she said it is not the Fed's role to instruct banks on where and how much to lend. Raskin said, "It is not included in the Fed's role to direct banks to lend only to specific sectors," adding, "The entity that chooses loan recipients is the bank, not the Fed." She also emphasized, "It is inappropriate for the Fed to pick winners and losers, and this is the most important principle of the Fed's bank supervision." Furthermore, she stressed, "The Fed should not favor any particular industry sector," and "The independence of the Fed is inviolable."

She said, "Bank supervision aims to ensure the safety of banks and the crisis resilience of the financial system," and "It cannot be compromised for short-term political goals or the interests of specific groups." Raskin emphasized more inclusive and meticulous bank supervision, stating that the Fed should ensure banks are adequately prepared for all risks.

Sarah Bloom Raskin, nominee for Vice Chair of the U.S. Federal Reserve (Fed), is responding during the Senate Banking Committee confirmation hearing on the 3rd (local time).
Photo by Reuters Yonhap News

Republican Senator Pat Toomey, ranking member of the Senate Banking Committee, stated that he cannot accept Raskin's nomination. In particular, he criticized the change in Raskin's attitude.

Senator Toomey said, "This is the most impressively changed attitude I have seen in a confirmation hearing," and added, "If Raskin is confirmed, the Fed will adopt policies that do not allocate capital to carbon-intensive industries." He pointed out, "Unelected officials like Raskin are trying to use bank regulation to introduce environmental policies opposed by Congress," and said, "The Fed should not lead climate change policies."

Republican Senator John Kennedy referred to a New York Times column written by Raskin in 2020, questioning why the Fed helped dying industries by allowing fossil fuel companies to participate in the COVID-19 emergency support program. Republican Senator Tim Scott also pointed out that it is risky for the Fed to advocate for specific sectors.

Republican Senate Minority Leader Mitch McConnell said in a statement after the hearing, calling it "an act of opening Pandora's box," and warned, "The Fed will become a highly political, extra-constitutional institution rather than a politically neutral central bank." He added, "If Raskin assumes office, workers will be harmed, American jobs will decrease, U.S. economic independence will become difficult, and the Fed's independence will be undermined."

In response, Democratic Senator Sherrod Brown, chairman of the Banking Committee, emphasized that Raskin is the most qualified person ever for the Fed Vice Chair position overseeing bank supervision. Chairman Brown added that Raskin had no issues during previous confirmation hearings for Fed Governor and Deputy Treasury Secretary. Raskin served as a Fed Governor during President Barack Obama's first term and as Deputy Treasury Secretary during his second term.

On the same day, the Banking Committee also held confirmation hearings for Fed Governors Lisa Cook and Philip Jefferson alongside nominee Raskin.

Chairman Brown previously announced plans to process the five confirmation nominations?including Jerome Powell's renomination as Fed Chair, Lael Brainard's nomination as Fed Vice Chair, and the three Fed nominees who completed the Banking Committee hearings?by the 15th.

This content was produced with the assistance of AI translation services.