Fulcrum Washington Update: New Fed Nominees Get a Confirmation Hearing Date but Raskin Facing Growing Opposition
The Senate Banking Committee is now expected to hold confirmation hearings for the three recent Federal Reserve nominations - Sarah Bloom Raskin for Vice Chair for Supervision and Lisa Cook and Philip Jefferson for Governor seats on - February 3rd.
We continue to believe that Cook and Jefferson will face little opposition and be approved by the Committee and ultimately confirmed by the full Senate.
However, we are hearing/seeing growing opposition from Republicans to the nomination of Raskin. The issue Republicans are pointing to is her views on Climate Change. In particular, they are questioning her past written views that climate change is a systemic risk to the US financial system and the Fed should play a significant role in mitigating that risk.
Additionally, a consortium of trade associations representing the oil and gas industry is opposing her confirmation for her advocacy for de-banking the sector to encourage climate goals and that the Federal Reserve should play a role in pressuring banks to cut off credit to the sector.
Beyond Republican opposition to Raskin, we will be watching closely two Senate Democrats on this vote: Senator Joe Manchin (D-WV) and Senator Jon Tester (D-MT) who represent states with significant oil/gas operations. Tester serves on the Senate Banking Committee.
However, we would point to the recent Senate Banking Committee confirmation hearing of Lael Brainard for Vice Chair of Monetary Affairs where she was asked by Republican senators about the idea of the Fed bringing pressure on banks over climate change. Brainard argued against the idea, saying, “we do not want to tell banks what sectors to lend to, or not to lend to.” She went on to say the Fed does not engage in “environmental policy,” but it does have a responsibility to evaluate possible climate risk to the financial sector. Brainard said: “We do have some sort of responsibility for understanding potential financial stability implications of a host of different kinds of things. We don’t have any expertise in disease and pandemics. But certainly, it turned out that the pandemic had enormous financial stability consequences.”
We continue to believe Raskin will, in all likelihood, get confirmed. It is likely to be a little tougher than first expected.
The Senate Banking Committee has not yet set a date for a vote on the re-nomination of Jay Powell for Fed Chair or Brainard for Vice Chair – which is surprising to us considering the importance of the upcoming March Fed meetings where it is expected the Fed will begin raising rates. Both are likely to be easily confirmed (although it is expected a number of Progressive Democrats are expected to vote against Powell - led by Senator Elizabeth Warren (D-MA) But we do not see nearly enough votes to block his confirmation).
We will update you as soon as we learn when that vote is scheduled in the Committee and when the full Senate will vote on final confirmation. Please let us know if you have any questions.