The top Republican on the banking committee has written to President Joe Biden questioning his Federal Reserve picks’ geographic and industrial diversity. The inquiry raised the concern for legal problems that could threaten the nominations.
In a Tuesday letter to the White House, Sen. Pat Toomey raised the problems about the people Biden recently nominated for crucial positions at the central bank. The Pennsylvania Republican hinted that Biden’s picks could be in violation of the Federal Reserve Act and said he is seeking clarification on the matter.
The act determines that Presidents can select “not more than one” pick from each Federal Reserve district and that the choices should “have due regard to a fair representation of the financial, agricultural, industrial, and commercial interests, and geographical divisions of the country.”
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Toomey wrote that if Biden’s choices are confirmed, a majority of the Fed’s Board of Governors would hail from the central bank’s Fifth District, which encompasses Washington, D.C., and its surrounding suburbs in Virginia and Maryland as well as North Carolina, South Carolina, and West Virginia.
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President Biden’s nominee to head the central bank for another term, Fed Chairman Jerome Powell, is listed by the White House as a resident of Maryland. His choice for Vice Chairwoman, Lael Brainard, is listed as a resident of Washington, D.C. Sarah Bloom Raskin, Biden’s pick for Vice Chairwoman of supervision, resides in Maryland. Philip Jefferson, another board pick, resides in North Carolina.
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“What District do you believe each of these individuals will represent, and what specific characteristics qualify each of them as being from that District?” Toomey asked Biden in the letter. “In what circumstances can a current board member’s District be changed and how?” Toomey also raised concerns about fair representation of the economy. He said that only two board members would have “any significant experience” in the private economy if the nominees were confirmed. He also noted that no board members would have experience working in energy, one of the country’s largest economic sectors.
“While a lack of expertise at the Federal Reserve Board in any particular industry is inevitable, the demonstrated hostility of one nominee, Sarah Bloom Raskin, towards a sector that supports employment for millions of Americans, is unacceptable,” Toomey argued.
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Raskin, who previously served as a governor at the Fed from 2010-14, has voiced her opinion that climate change is a systemic risk to the U.S. financial system and that the Fed should play some form of mitigating role in that risk. Toomey and some committee Republicans have argued the Fed is at risk of exceeding the dual mandate given by Congress, maximizing employment and price stability.
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In closing out the letter, Toomey called on Biden to describe how he has complied with the Federal Reserve Act’s diversity mandate with his recent central bank picks. He asked for responses to the questions prior to the nominees’ hearings.
The White House maintains that Biden’s picks are legally sound.
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