GOP Senator Toomey Previews Tough Questioning for Biden’s Fed Board Picks

(Bloomberg) -- The top Republican on the Senate Banking Committee strongly criticized President Joe Biden's nominee to be Federal Reserve vice chair for supervision for what he called her “repeated, explicit and recent advocacy” for using the central bank's powers to steer credit away from fossil fuels.

In an interview on Bloomberg Television's “Balance of Power” with David Westin on Wednesday, Patrick Toomey described Sarah Bloom Raskin's views on regulating climate risks as his top worry. His comments come on the eve of a key confirmation hearing for three Fed nominees.

He also said the hearing could show whether nominee Lisa Cook, who would be the first Black woman on the Federal Reserve Board of Governors, has enough experience in monetary policy. Toomey made clear he doesn't think racial disparities -- something Cook has long studied -- should determine Fed policy on interest rates or inflation targets.

But climate change is set to take the spotlight on Thursday.

“My biggest concern is with Sarah Raskin and the nature of that concern is her longstanding, repeated, explicit and recent advocacy for the financial regulators generally and the Fed in particular to allocate credit specifically away from fossil-fuel-burning industries because she thinks the risk from climate change is so imminent that that's necessary,” Toomey said.

Biden and members of his party have argued that the Fed should act to understand and mitigate climate risks to the financial system, and no Senate Democrat has yet opposed any of the nominees. They also have touted his picks as bringing diversity to an organization long criticized for a lack of it.

The White House didn't immediately comment.

Not for Fed

The Pennsylvania Republican said the people who are accountable to the public, not Fed governors, should decide what to do about climate change and charged that progressives were hoping to enlist the Fed into this fight.

“There's no mystery here -- they want to systematically make capital more expensive and less available to this sector of the economy because they want to accelerate a transition away from fossil fuels,” Toomey said. That, he said, is inconsistent with the Fed's mandates.

Democratic Senator Tina Smith of Minnesota, a member of the banking committee, defended the nominees later on “Balance of Power.”

“My Republican colleagues seem to have this obsession with keeping any conversation about the risks of climate out of any conversation that the Federal Reserve is having, and I just think that's flat-out wrong,” Smith said. She said she met with Raskin privately last week and strongly supports her.

‘Legitimate Question'

Toomey also questioned whether Cook was qualified to set monetary policy despite having a doctorate in economics.

“I think there is a legitimate question here,” he said, saying her doctorate “has nothing to do with monetary policy.”

“Most of her work that she has done in academia is about systemic racism,” he said. “She has not done a great job explaining her views on monetary policy so we'll see. I mean, this is why we have hearings.”

Toomey said that there is room on the Fed for someone who isn't an expert on monetary policy “as long as you are sufficiently knowledgeable to make a well-informed decision. You cannot come in and not have any knowledge about monetary policy.”

Current Fed Chair Jerome Powell and other picks in the past were not trained economists, unlike Cook.

Smith touted Cook's broad experience in economics, said the Fed needs diversity and dismissed questioning of her monetary policy experience.

“The Fed is not some sort of monetary policy monastery where the governors go off and just sort of only consider the impacts of monetary policy,” she said, noting the Fed also has roles on labor policy, bank supervision and consumer protection.

A third Fed pick, Philip Jefferson, a former Fed staffer, has yet to receive much criticism ahead of the hearing.