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GOP moves to block vote on Biden Fed nominees over Raskin ties to fintech firm

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U.S. Senator Pat Toomey (R-PA) questions Treasury Secretary Steven Mnuchin during a hearing on “Examination of Loans to Businesses Critical to Maintaining National Security” before the Congressional Oversight Commission at Dirksen Senate Office Building, in Washington, December 10, 2020.
Sarah Silbiger | Pool | Reuters

Senate Republicans intensified their fight against one of President Joe Biden’s nominees to the Federal Reserve on Tuesday when they threatened a surprise boycott to disrupt a committee confirmation vote that was originally scheduled for later in the day.

The protest escalated a partisan feud over the president’s choice of Sarah Bloom Raskin to be the Fed’s next vice chair for supervision, one of the most powerful bank regulators in the world.

Republicans led by Senate Banking Committee ranking member Pat Toomey, R-Pa., have criticized Raskin for her prior work as a director of Reserve Trust, a fintech company that received a Federal Reserve master account while Raskin served on its board.

“Important questions about Ms. Raskin’s use of the ‘revolving door’ remain unanswered largely because of her repeated disingenuousness with the Committee,” Toomey said in a statement Tuesday morning.

“Committee Republicans aren’t seeking to delay her vote. We’re seeking answers,” he added. “Until basic questions have been adequately addressed, I do not think the Committee should proceed with a vote on Ms. Raskin.”

The boycott would deny Democrats on the committee a quorum to vote to recommend the president’s slate of nominees to the full Senate, a typical blessing presidential nominees receive before moving on to a floor vote.

If even one Republican committee member would attend the meeting, Banking Committee Chairman Sen. Sherrod Brown, D-Ohio, would have enough members present to hold a vote, and all five nominees would advance out of the committee. Toomey was confident Tuesday that no Republicans would attend.

If Republicans get their way, Brown could opt to hold committee votes on all of the Fed nominees minus Raskin while the GOP explores her business dealings. That would advance Biden’s other choices: incumbent Chair Jerome Powell for a second term, Lael Brainard for vice chair, and Lisa Cook and Philip Jefferson for the Fed’s board.

Brown fired back against Toomey and blasted the Republicans for threatening to skirt their obligations as lawmakers. He also told reporters separately that, as of late Tuesday morning, he plans to move forward as planned with the 2:15 p.m. ET committee vote.

“Today, Ranking Member Toomey chose to abdicate his duty to the American people and put our economic recovery at risk, instead of doing his job and showing up to vote on Ms. Bloom Raskin, Dr. Cook, Dr. Jefferson, Gov. Brainard, and Chair Powell’s nominations,” Brown said in a statement. “Americans depend on us to get these nominees on the job as soon as possible.”

It’s uncertain whether the Republican blockage can permanently delay the nominees’ confirmations. If the GOP indefinitely holds up the committee vote, Senate Majority Leader Chuck Schumer, D-N.Y., may be forced to “discharge” the president’s nominees without recommendation in what would amount to a notable blot on every candidate’s confirmation.

The threat of a high-profile dispute over Fed nominees, who are supposed to be insulated from partisan politics, could pose enough of a reputational risk to force the White House to opt for a less controversial pick.

A White House spokesman did not respond to a request for comment on the boycott. The White House has repeatedly said Raskin did nothing wrong and reiterated that stance Tuesday morning before Republicans announced their intent to skip the meeting.

“Sarah Bloom Raskin is one of the most qualified people to ever be nominated to serve on the Board of Governors of the Federal Reserve,” the White House said in an emailed memo. “Despite her qualifications, Senators Pat Toomey and Cynthia Lummis over the last several weeks have lobbed unfounded and unfair attacks at Raskin related to her time on the Board of Directors of Reserve Trust.”

“Their attacks that somehow the company received special treatment are backed by no evidence – no records, no paperwork, no statements, nothing – and yet they continue to push this narrative,” the administration added.

Biden in December nominated Powell and Brainard to serve as the Fed’s chair and vice chair, respectively. The president later nominated Raskin to serve as vice chair for supervision, as well as Cook and Jefferson to be Fed board governors.

But Toomey and fellow Republican Sen. Cynthia Lummis of Wyoming have made clear that they have taken issue with Raskin alone over her tenure at Reserve Trust.

Sarah Bloom Raskin, Federal Reserve supervision vice chair nominee for U.S. President Joe Biden, listens during a Senate Banking, Housing, and Urban Affairs Committee confirmation hearing in Washington, D.C., U.S., on Thursday, Feb. 3, 2022.
Bill Clark | Bloomberg | Getty Images

Toomey said in a letter released on Friday that Raskin phoned Kansas City Fed President Esther George in 2017 to advocate for the fintech company. The Fed previously denied it special access to the central bank’s payments system.

At the time in 2017, Raskin had just left her role as the Treasury Department’s deputy secretary. Prior to her Treasury work, she spent more than three years at the Federal Reserve as one of its governors.

After Raskin’s personal intervention on behalf of Reserve Trust, the Kansas City Fed approved the company’s second request for an account in 2018. The Kansas City Fed claims that its reversal was not the result of Raskin’s call.

Republicans, who say they want more time to vet Raskin, do not suggest that Raskin’s actions were illegal. Rather, they consider it an example of the “revolving door” between politics and corporate interests in which former government officials use their connections and clout in government to later lobby on behalf of businesses for a payout.

Raskin, who received stock in Reserve Trust when she joined its board, sold her financial stake upon her 2019 departure from the company for about $1.5 million.

Reserve Trust’s exclusive master account remains the company’s single largest selling point to potential customers. It is the first thing the company says about itself on the homepage of its website.

CNBC’s Ylan Mui contributed reporting.

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