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June 25, 2022

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Fed nominee Bloom Raskin pledges not to ‘direct loans’

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WASHINGTON (AP) — Pushing back against critics, a key nominee to the Federal Reserve’s Board of Governors said in testimony before a Senate panel that she would not make it more difficult for any industry to obtain bank loans.

Sarah Bloom Raskin, a former Fed governor and deputy Treasury Secretary, has been nominated by President Joe Biden to be the Fed’s vice chair for supervision, the nation’s top bank regulator. Republicans have charged that Bloom Raskin’s previous statements on climate change suggest she would use her position at the Fed, if confirmed, to discourage banks from lending to oil and gas companies.

The White House has disputed that view and on Thursday, in remarks before the Senate Banking Committee, Bloom Raskin said she would not be able to take such steps as vice chair for supervision.

“It is inappropriate for the Fed to make credit decisions and allocations,” Raskin said. “Banks choose their borrowers, not the Fed. It’s inappropriate for the Fed to choose winners and losers and doing so is not the proper institutional role of the Fed.”

Oil and gas trade associations have criticized Raskin’s nomination, though not all have explicitly opposed her. The Chamber of Commerce, in a letter to the committee last week, urged the senators to simply “raise several important issues” during the hearing.

Some banking trade groups congratulated Raskin on her nomination and have not opposed her nomination. Raskin was Maryland’s top bank regulator from 2007 to 2010, and has won plaudits from leading Maryland bankers for taking a collegial approach.

The Senate panel is also considering the nominations of Lisa Cook and Philip Jefferson to the Fed’s board. If approved, they would vote on the Fed’s interest rate policies and on oversight of the financial system. Cook is the first Black woman to be nominated to the Fed’s board, and Jefferson would be only the fourth Black man on the board if confirmed.

Sen. Pat Toomey, a Republican from Pennsylvania, criticized Bloom Raskin and Cook, while expressing support for Jefferson. Cook has come under attack from conservative political commentators who have suggested she is unqualified for the position.

Toomey said Cook has engaged in “extreme left wing advocacy” and “has supported race-based reparations, promoted conspiracies about Georgia voter laws, and sought to cancel those who disagree with her views.”

Cook is an economist at Michigan State University and former staffer in President Barack Obama’s White House. She earned her economics PhD from the University of California, Berkeley, and has college diplomas from Spelman College and Oxford University.

Some of her best-known research was on the impact of racial violence on African-American invention and innovation. A 2013 paper she wrote concluded that racially motivated violence, by undermining the rule of law and threatening personal security, depressed patent awards to Black Americans by 15% annually between 1882 and 1940 — a loss that she found also held back the broader U.S. economy.

On Thursday, Cook said that she sees fighting inflation, which is currently at a four-decade high, as the Fed’s top priority.

“I agree with Chair Powell that our most important task is tackling inflation,” Cook said. “High inflation is a grave threat to a long, sustained expansion, which we know raises the standard of living for all Americans and leads to broad-based, shared prosperity.”

Jefferson, an economist and dean at Davidson College in North Carolina, also said he considers rising inflation a major risk to the economy.

“The Federal Reserve must remain attentive to this risk and ensure that inflation declines to levels consistent with its goals,” Jefferson said.

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