By Nathalie Voit
In a statement released Jan. 14 by the White House, President Joe Biden announced his nomination of Sarah Bloom Raskin to serve as vice-chair of supervision for the Fed. The president also nominated economists Lisa Cook and Philip Jefferson to serve as governors.
If confirmed by the Senate, Raskin, a former Treasury official and central bank governor, would step into one of the most powerful economic positions in the world as the Fed’s top banking regulator.
Raskin is expected to take a preventive approach to climate risk, potentially politicizing the Fed in a bid to steer capital from fossil fossils to clean energy.
“Our collective well-being is at risk from serious disruption from climate change,” Raskin said in June at the Green Swan Conference, a global conference dedicated to addressing the risks posed by climate change on financial markets.
Raskin added that market forces alone are not equipped to manage the transition away from carbon to a safe and net-zero economy. As such, central banks must play a heavy hand in steering financial firms through the transition or risk “unsustainable climate catastrophe.”
In an op-ed for the New York Times written in May 2020, Raskin criticized the Fed’s decision to implement broad-based lending programs to prevent businesses, including fossil fuel companies, from failing due to the government’s pandemic lockdowns. Raskin said the Fed should have excluded the fossil fuel industry from receiving federal aid.
“The Fed’s unique independence affords it a powerful role,” Raskin wrote. “The decisions the Fed makes on our behalf should build toward a stronger economy with more jobs in innovative industries—not prop up and enrich dying ones.”
Her hardline views on climate change are expected to turn off many Republicans, who would prefer the Fed simply focus on its primary job, maintaining financial stability and promoting a healthy economy via the establishment of sound monetary policy.
According to Ian Katz, a financial-policy analyst at Capital Alpha Partners, Raskin is expected to face a “tight, contentious vote.” However, she could be confirmed by the Senate pending universal backing from Democrats or approval from at least one or two Republicans, Katz said, according to The Wall Street Journal.
If all of President Biden’s picks are confirmed, the president will have stacked the seven-member board with five of his political appointees. Raskin would also become one of four women to hold positions in the Fed.