Mar 17, 2022

Raskin's nomination fails.

Raskin's nomination fails.

What does this mean for the Fed? And climate change?

I’m Isaac Saul, and this is Tangle: an independent, ad-free, subscriber-supported politics newsletter that summarizes the best arguments from across the political spectrum on the news of the day — then “my take.”

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Today's read: 11 minutes.

We're covering Sarah Bloom Raskin and her failed nomination. Plus, poll results from yesterday and a reader question about "lightly editing" something.

Sarah Bloom Raskin, whose nomination just failed, speaks at an event on cyber security. Photo: CSIS / Flickr
Sarah Bloom Raskin, whose nomination just failed, speaks at an event on cyber security. Photo: CSIS / Flickr

Gas prices.

Tomorrow, we're going to be covering one of the most-asked questions I get in Tangle: Can presidents really move the needle on gas prices? What causes prices to rise and fall? Who is responsible for what is happening now? Keep an eye out for it in tomorrow's Friday edition, and feel free to forward the newsletter to folks who might find it interesting.

Quick hits.

  1. Survivors are beginning to emerge from a theater in Mariupol, Ukraine, where hundreds of civilians were sheltering when Russia bombed it. (The attack)
  2. President Biden announced another $800 million of military aid to Ukraine as part of a $14 billion package Congress passed last week. (The money)
  3. A fresh wave of Covid-19 in Europe, caused by a "subvariant" of omicron, could mean cases are about to begin rising in the United States, too. (The news)
  4. A federal investigation into the business dealings of Hunter Biden remains active, even after he paid off a significant tax liability. (The investigation)
  5. The Senate banking committee approved the renomination of Jay Powell as well as two other members of the Fed board of governors just a day after Sarah Bloom Raskin's nomination was withdrawn. Lisa Cook's nomination remains deadlocked at 12-12. (The vote)

Our 'Quick Hits' section is created in partnership with Ground News, a website and app that rates the bias of news coverage and news outlets.

Today's topic.

Sarah Bloom Raskin. On Tuesday, Raskin withdrew her nomination to join the Federal Reserve's Board of Governors after Sen. Joe Manchin (D-WV) and every Senate Republican indicated they would oppose her confirmation, leaving President Biden one vote short to force a 50-50 tie and push Raskin's nomination through. If confirmed, Raskin would have become the most powerful banking regulator in the nation.

Reminder: The Federal Reserve is the central banking system of the United States, responsible for pursuing full employment and stable prices. One of the ways the Fed does this is by changing the interest rate, the rate at which someone is charged to borrow money, as they did this week (The Fed increased rates in an attempt to tamp down inflation). Raskin was nominated to join the Board of Governors, the seven-person board that serves 14-year terms and oversees The Fed. Two other seats are currently vacant on the board, as well as another Fed nomination, and Chairman Jerome Powell still needs to be reappointed.

President Biden nominated Raskin and celebrated her experience in cybersecurity, climate change and consumer protection. But Republicans and Manchin opposed her because they feared she would use her regulatory authority to discourage banks from lending money to oil and gas companies. Specifically, Raskin drew criticism for arguing in 2020 that the Treasury Department and Fed should not provide broad-based emergency-lending backstops to highly indebted fossil-fuel companies.

“The Senate’s bipartisan rejection of Sarah Bloom Raskin’s nomination sends a powerful message to the Fed, and to all financial regulators, that it is not their job to allocate capital or stray from their mission to pursue extraneous or politically charged campaigns,” Sen. Pat Toomey (R-PA) said in a statement.

Supporters, meanwhile, said Raskin's views were mainstream and it was a reasonable position to worry about the risks that climate change poses to insurance companies, banks and financial firms.

“Sarah was subject to baseless attacks from industry and conservative interest groups," President Biden said.

Previously, Raskin had served on the Fed Board of Governors from 2010-2014, as a top Treasury Department official, as Maryland’s state commissioner of financial regulation, and worked as a law professor at Duke University. She is also married to Rep. Jamie Raskin (D- MD).

Below, we'll take a look at some arguments from the right and left about Raskin's nomination — then my take.

What the right is saying.

  • Republicans say Raskin clearly wanted to extend the Fed's power beyond its purview.
  • They said she was a dangerous nominee for the energy sector at a time when things are already a mess.
  • They suggested she may have ethical red flags because of her ties to a fintech company that received rare treatment from the Fed.

The Wall Street Journal editorial board said Joe Manchin "made the right call" by opposing Sarah Bloom Raskin.

"President Biden nominated Sarah Bloom Raskin to be the Federal Reserve’s vice chairman for bank supervision because she wants to use financial regulation to redirect capital from fossil fuels," the board wrote. "She’s the wrong person for the wrong job at the wrong time, as Joe Manchin explained in his own words Monday in saying he opposes her nomination. Ms. Raskin told the Senate she won’t use her powers against any industry, but her public record is clear. In June 2020, she wrote that financial regulators must 'do all they can—which turns out to be a lot—to bring about the adoption of practices and policies that will allocate capital and align portfolios toward sustainable investments that do not depend on carbon and fossil fuels.' There are many similar quotes.

"Banks, asset managers and insurers are already bowing to political pressure to cut financing for fossil fuels," the board added. "AIG announced this month that it will stop investing in or insuring Arctic oil exploration. Progressive groups last week demanded that the six largest U.S. banks stop financing liquefied natural gas export expansions in the Gulf Coast. From the powerful supervisory perch at the Fed, Ms. Raskin could make this financing even harder to obtain. The result would be reduced supply of fossil fuels and much higher energy prices."

In National Review, Dominic Pino said "Climate policy is the proper task of elected legislators, not unelected central bankers."

"If progressives are unhappy with the state of American climate policy, they need to win elections and pass laws to address its perceived shortcomings, not appoint central bankers who will use financial regulation to get what they want," he wrote. "The Fed hasn’t done so great on its actual mandate from Congress, which includes low and stable inflation, and its mission creep into other areas should be opposed.

"There are also ethical concerns over Raskin. As Tim Carney wrote for the Washington Examiner in February, Raskin 'is a revolving-door lobbyist who used her access to get special treatment from the Fed for a company on whose board she sat. She thus made more than a million dollars for herself.' Additionally, her husband, Representative Jamie Raskin (D-MD), failed to properly report her stock holdings, as required by congressional ethics rules," Pino said. "Of Biden’s Fed nominees, Raskin is by far the most important, and her defeat would be a major victory for Senate Republicans."

In Fox News, Chuck DeVore wrote about the four reasons not to confirm Sarah Bloom Raskin.

"What good is power unless you can use it to enrich yourself?" DeVore asked. "In Raskin’s case, this entailed being invited on the board of Reserve Trust, a financial technology firm that had a big problem—it needed a Master Account from the Fed for its business model (clearing dollar transactions with the developing world without the need to partner with a traditional bank) to work. No fintech company had ever gotten Fed approval for a Master Account and Reserve Trust had just had their first attempt rejected. Enter Raskin and a friendly phone call with the Kansas City Fed and, before you know it, Reserve Trust becomes the first fintech firm with a Master Account.

"After some two years of service on the board with Reserve Trust’s value now enhanced, Raskin sold the shares she was granted for almost $1.5 million to Amias Gerety, her fellow Obama-era Treasury Department alum. For just a few board meetings and a phone call, $1.5 million’s not a bad haul," DeVore wrote. "Under questioning from senators, Raskin pledged that she would not act upon her past repeated threats to defund America’s domestic energy industry. The problem is, once confirmed by the Senate and installed as Fed vice chairwoman, there’s little the Senate can do, practically, to recall her."

What the left is saying.

  • The left argued that Raskin was highly qualified and had bipartisan support until the fossil fuel special interests targeted her.
  • They say she is proof Republicans will obstruct any effort to address climate change.
  • They worry about what this means for the future of the Fed.

In January, the Bloomberg editorial board endorsed Raskin, saying she was "a good choice for what will be an immensely challenging assignment."

"Raskin herself was Maryland’s state commissioner for financial regulation before joining the Fed, where from 2010 to 2014 she helped draft rules to implement the Dodd-Frank reform legislation," the board wrote. "She then worked from 2014 to 2017 as deputy secretary of the Treasury, where she concentrated on issues including financial infrastructure and cybersecurity — relevant experience in an age of cryptocurrency and state-sponsored hacks.

"Of course, progressive Democrats will be expecting the Fed to do much more, for better and worse," the board added. "Ideally, this will facilitate progress in areas such as financial inclusion, containing risks in the crypto realm, updating fair-lending rules, and preparing for the potential repercussions of climate change. Raskin is already well versed on some of these issues. The danger is that the Fed will get bogged down in partisan battles and overly prescriptive rulemaking, while failing to address the system’s broader fragility. Navigating these challenges will require an unusual combination of ambition and restraint. Raskin’s record suggests she’s well qualified. The Senate should allow her to get to work without delay."

In Grist, Emily Pontecorvo said "the remaining paths for the Biden administration to usher in a new era of federal climate action are crumbling."

"The president’s signature climate legislation to fund clean energy, the Build Back Better Act, has been held up in the Senate for months," she wrote. "The Supreme Court is expected to curtail the Environmental Protection Agency’s power to regulate greenhouse gas emissions. And now, Sarah Bloom Raskin, a nominee to the Federal Reserve Board who aimed to prevent a climate change–fueled financial crisis, has been forced to withdraw. When President Joe Biden nominated Raskin to be the Fed’s vice chair for supervision in January, he called her 'among the most qualified nominees ever for the position.' Raskin had already served on the Fed Board for three and half years under President Barack Obama. The Senate voted her in unanimously in 2010.

"Raskin has advocated for federal regulators to assess and mitigate climate risks to the U.S. financial system," she added. "Climate change poses not only physical threats to the economy via the damage wrought by drought, wildfires, and storms, but also what’s called 'transition risk.' The shift to a low-carbon world is already underway, and banks that continue to fund fossil fuels risk ending up with assets that have no value. Raskin has suggested that financial regulators could help incentivize the shift away from carbon-intensive assets... After her nomination was announced, 41 oil and gas trade associations wrote a letter to the Senate Banking Committee opposing Raskin. They accused her of having an 'agenda at odds with the President’s goal of providing Americans with reliable, affordable energy,' and of scheming to 'reshape the entire financial system in ways Congress never intended.'"

David Dayen called out the "real reason" some Republicans oppose Raskin.

"GOP Banking Committee members have latched onto a story about how Raskin, while serving on the board of a Colorado-chartered fintech firm called Reserve Trust, personally lobbied the Kansas City Fed for a master account, which would give it access to the central bank payment system. Reserve Trust did get its master account in 2018," Dayen wrote. "Reserve Trust’s founder has called the allegations against Raskin 'completely false,' saying that the master account was granted only after the company changed its business model. (The Kansas City Fed, which granted the account, backed this up, though the Colorado Division of Banking has disputed this.) But the explanations haven’t been sufficient for... Sen. Cynthia Lummis (R-WY), who repeatedly hammered Raskin over the master accounts in a Banking Committee hearing.

"However, Lummis has an ulterior motive for raising the master account issue, one that she hasn’t been particularly shy about stating. For months, Lummis has been publicly lobbying for two crypto companies in Wyoming to get their own master accounts," Dayen wrote. "Specifically, these firms are state-chartered non-banks intended to allow their customers to convert crypto assets into cash—but they need a master account in order to do that. Effectively, these firms would become very similar to a bank, with full access to the Fed’s payment system, but without having to submit to federal regulation or even FDIC deposit insurance. Experts have warned of potentially grave consequences for financial stability and consumer protection. Lummis, critics argue, is pressuring the Fed to make that happen, and using the Raskin/Reserve Trust situation as leverage."

My take.

This was a frustrating one to watch.

For starters, it should be said that Republicans went to unprecedented lengths to stop this nomination. The Republican members of the Senate Banking Committee literally staged a boycott — the kind of obstruction that I don't think has ever happened in this space before — denying Biden a quorum for a vote to even take place. Along with obstructing Raskin, they obstructed Jerome Powell's renomination (as head of the Fed) and the three other nominees at the Fed, all just to sink Raskin. This is at a time with inflation running wild, global markets as volatile as ever, and great economic challenges in front of us. And it's been months. This is why Biden called Republicans out for obstructionism in his State of the Union address.

I think this kind of politicking is extremely dangerous, even though Republicans did begin to approve the other nominees last night. And I don't think Raskin is worth the hooplah. The concept she has written about — the idea that regulatory agencies would more strongly consider climate change — is literally novel only in this specific space in the United States. As Raskin herself pointed out in a letter to Biden, we are well behind the rest of the world — and the Fed is farther behind than other domestic agencies.

This is not a novel or radical position. The Department of Defense has been systematically analyzing the energy security risks of climate change for years, developing mitigation strategies to confront them. Banks and insurance companies incorporate financial aspects of extreme weather events into their plans. Farmers, ranchers and businesses across the country already are struggling to adapt to extreme floods, hurricanes, rising sea levels and wildfires. Central banks around the world have already begun acting on these issues.

The idea that members of the Fed should or need to be blind to this stuff in order to do their work strikes me as ridiculous. It reminds me of the debate about journalism — as if every reporter needs to also be a robot with no empathy for the subject they’re covering. Just as with journalists, the question is not whether Raskin or other members of the board have individual beliefs. That is a given. It's whether they are qualified, do their jobs fairly or act like hacks. And Raskin is clearly not a hack. Her qualifications are nearly flawless, and her record — on the regulatory side — is totally within the norm.

This is my long-held position on unelected nominees like her. If they are unqualified, obviously corrupt, violated an ethical standard, or are being nominated for the wrong reasons (i.e. to fire up a political base), those would be good reasons to sink the nomination. But those things aren't true here (will get into details below). They certainly aren't obvious enough to maintain vacancies on the Fed at a time like this and go to the lengths of literally not showing up for work just to sink her nomination. Perhaps most unnerving is that they've now sunk a nominee with expertise in cybersecurity, which is arguably the single most pressing issue (aside from inflation) that the Fed faces.

By far the most worrisome thing about Raskin was her connection to a company that appears to have gotten preferential treatment from the Fed. Raskin joined the board of Reserve Trust, a fintech company, that had previously been rejected in an application to use the Fed's payment rails. She "guided" the company to change its business models in a way that would win its approval and fit in the federal regulations, re-applied, and got what they were looking for. Reserve Trust and the Kansas City Fed have said everything was above board, though their story has differed from the Colorado Division of Banking's description of how the acceptance came to be.

No matter whose story you believe, though, at the very worst this looks like your run-of-the-mill D.C. to private sector revolving door sliminess, where someone at a powerful regulatory agency goes into the private sector, helps them navigate federal law in a way their competitors can't or won’t, gets a big payday, then moves back into government years later. But during hearings, Republicans produced little more than insinuations. There was no smoking gun of foul play and no evidence Raskin had made a single call and received such special treatment from the Fed.

It certainly stinks, and I'm not a fan. But I don't think it is so risible — given Raskin's other qualifications — that her nomination was worthy of failure. Without all that, it's tough to see a justification for everything that has happened since. Raskin answered hundreds of questions about it, and in normal times that would have been satisfactory for at least a single vote from the other side — and certainly full support from Democrats.

But these are apparently not normal times. Now, we're left with a handicapped Fed at a time when the world is waiting for it not just to wrangle with inflation, but to help the country navigate the major financial disruptions from the war in Ukraine. And yes, while the Fed's purview is (and should be) a focus on full employment and economic stability, there are plenty of reasons to want a board of Governors also thinking about the future of energy, cybersecurity and much more. Instead, though, we're days — maybe even weeks or months away — from simply having an actual board of governors.

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Your questions, answered.

Q: When quoting guest authors, you have written “…wrote (and my team lightly edited) the piece below, which we’ve published in full.” This seems to me to be an oxymoron. What am I missing?

— Sandee, Norfolk, Virginia

Tangle: This is a great media literacy question.

There are usually a few descriptors like this that precede an interview or a reader submission. When interviewing someone, I will often say the transcript has been "lightly edited for length and clarity." This means that I have included every question and answer in the interview, but cleaned up some of the stutters, in-sentence corrections, and redundancy to make sure I'm showing you what the person who is speaking intended to say.

An example: An interviewee might say, verbatim, something like, "You know, I think that — well, I know some people are worried about inflation, but it's also just that we're going to have at some point to accept the fact that it's ultimately out of our control."

I might change an answer like that to: "I think that — I know some people are worried about inflation. But we're just going to have to accept at some point that it's ultimately out of our control."

The latter is clearer, easier to read, and preserves the integrity both of what the person and the hesitancy of their response (how they started with "I think" and then switched to "I know," a moment I wouldn't want to leave out). That's the kind of editing that happens in an interview to both make it clear but also preserve the emotion of a moment.

For the piece you're asking about, which was a reader submission, I am letting you know that we did not remove anything a) without the author's agreement or b) that fundamentally took away from the points they were making. If we had, I may have said something like "our team edited the piece to best fit the Tangle format" or "the original piece appeared in full in X publication."

But Lisa Selin Davis's piece about gender ideology, which we published, was published in full. We did not cut any arguments she made, though our team did clean up the writing and reorganize the piece a little bit (with her participation) in a way that we thought made it clearer. Hence: "Lightly edited and published in full."

Want to ask a question? You can reply to this email and write in (it goes straight to my inbox) or fill out this form.

A story that matters.

President Biden and his administration are reportedly preparing for a "mass migration event" when Covid-era policies on the border are ended. Right now, officials are using Title 42 — a health regulation — to immediately expel migrants at the border without hearing their asylum cases. 1 million migrants have been sent back across the border this way. But Title 42 was never meant to be permanent, and when Biden ends it, agencies are apparently planning for a surge of as many as 170,000 migrants to come to the border, which has already been strained this last year. "Internal discussions have raised alarms that human trafficking networks throughout Mexico and Central America will exploit the situation to 'generate a mass migration event,' Axios reported. News of the plans come as Biden is already facing criticism from the left and right for his handling of immigration, a potent issue in this coming election season.


  • 72.2%. The percentage of Tangle readers who said we should change our current daylight saving system to one permanent time throughout the year.
  • 53.1%. When picking between permanent standard and daylight saving, the percentage who said we should change it to permanent daylight saving time.
  • 46.9%. When picking between permanent standard and daylight saving, the percentage who said we should change it to permanent standard time.
  • 40.4%. The percentage who picked "change to permanent daylight saving time" when presented with all three options on what to do.
  • 33.9%. The percentage who picked "change to permanent standard time" when presented with all three options on what to do.
  • 25.7%. The percentage who picked "keep what we have now" when presented with all three options on what to do.

Have a nice day.

Ryan Turell, Yeshiva University's star basketball player, announced he was forgoing his senior year of college in an attempt to become the first Orthodox Jew to ever make it to the NBA. Turell is currently the leading scorer in all college basketball divisions, averaging 27.1 points per game and shooting 47% from three-point range. "Being the first Orthodox Jew in the NBA would mean the world to me, and a dream come true, God willing. But, just as importantly, it would mean the world to others that never saw this as a possibility," Turell told ESPN. Because of his faith, Turell doesn't travel from Friday night to Saturday night, though he said he "plans on playing on Shabbat and walking to the gym." ESPN has the story.

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