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Senate panel advances Powell, other Fed nominees after Raskin debacle

The Senate Banking Committee quickly approved President Joe Biden’s remaining four Federal Reserve nominees on Wednesday after Sarah Bloom Raskin withdrew her bid for the top oversight job at the central bank in the face of bipartisan opposition.

The panel voted to advance the nominations of Fed Chair Jerome Powell to a new term; Fed Governor Lael Brainard to serve as vice chair, and economists Philip Jefferson and Lisa Cook to become members of the bank’s board of governors. It also approved the nomination of Federal Housing Finance Agency Acting Director Sandra Thompson to a full five-year term as the nation’s top housing regulator.

The nominees would join the Fed as the central bank is grappling with the highest inflation in four decades. Fed policymakers, led by Powell, on Wednesday increased interest rates for the first time since 2018. Numerous other hikes are expected this year.

Republicans had held up the nominations over the choice of Raskin — a progressive darling who has called for greater scrutiny of banks’ lending to fossil fuel companies — to be the Fed’s vice chair of supervision, effectively the Fed’s bank watchdog.

Raskin withdrew her nomination on Tuesday after Sens. Joe Manchin (D-W.Va.), Susan Collins (R-Me.) and Lisa Murkowski (R-Alaska) said Monday that they would not support her.

Biden, in a statement Tuesday, said Raskin “was subject to baseless attacks from industry and conservative interest groups” and pointed to the support her nomination drew from former central bank officials, consumer advocates, economists and the financial industry.

Raskin had previously been confirmed to posts as a Fed governor and deputy Treasury secretary during the Obama administration without GOP opposition.

But her more recent endorsement of regulators taking a greater role in mitigating the financial risks posed by climate change quickly spurred opposition from Republicans, who contend that the Fed should stick to its narrower mandate of promoting price stability and full employment.

Raskin wrote in September that regulators should “ask themselves how their existing instruments can be used to incentivize a rapid, orderly, and just transition away from high-emission and biodiversity-destroying investments.”

Republicans and Manchin, whose state is the second-biggest coal producer in the country, also took umbrage at Raskin’s suggestion at the outset of the pandemic that the Fed was “singularly poised to seed strategic investments in future economic stability” and thus should not aid oil, gas and coal companies.

“Concessions to the fossil fuel industry are a risky investment in the past,” she wrote in a May 2020 New York Times op-ed.

Cook, who would become the first Black woman to serve on the Fed board, had drawn sharp resistance from Republicans over her views and ignited a broader debate over the central bank’s role in fighting racial inequality. The committee advanced her nomination on a tie vote.

The Michigan State University professor, who has long explored the impact of racial injustice on the economy, became a flashpoint for Republican complaints about the Fed and its growing research on race-related trends. Some GOP lawmakers also questioned her qualifications for the job, a line of criticism that sparked a backlash from Democrats and some prominent economists who came to the defense of Cook, herself a Ph.D. economist.

Jefferson, a former Fed economist who is also Black, is a professor and administrator at Davidson College in North Carolina. His work has focused on the “role of education as a buffer against unemployment, the effect of business cycles on poverty rates, and the distribution of income between labor and capital,” according to his bio.

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