Dominic notes that:
Senator Joe Manchin (D., W. Va.) will not support Sarah Bloom Raskin, President Biden’s nominee for the Federal Reserve’s vice chairman of supervision. “Her previous public statements have failed to satisfactorily address my concerns about the critical importance of financing an all-of-the-above energy policy,” Manchin said.
Homing in on this objection, the New York Times complains that the Republicans on the banking committee:
have so far stonewalled her nomination in committee, raising concerns about her position on climate regulation and her work in the private sector.
But this, of course, is misleading. As Manchin has made clear, the problem with Sarah Bloom Raskin is not the nature of “her position on climate regulation” per se, but rather that Sarah Bloom Raskin thinks that it would be her job to have a “position on climate regulation.” Explaining his opposition today, Manchin explained that:
The Federal Reserve Board is not an institution that should politicize its critical decisions. The time has come for the Federal Reserve Board to return to its defining principles and dual mandate of controlling inflation by ensuring stable prices and maximum employment. I will not support any future nominee that does not respect these critical priorities.
The Federal Reserve is not a replacement for the United States Congress. It is an institution that was created by the United States Congress. And it was created to play an extremely narrow role within a system that is supposed to be dominated by . . . well, the United States Congress. Sarah Bloom Raskin has not indicated that she understands that, and, as a result, her nomination has rightly been deemed inappropriate.
Raskin has previously suggested that it is important for:
our financial regulatory bodies to 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.
More specifically, she has argued that the sort of risks for which the Federal Reserve should scour the landscape:
might include disorderly price adjustments in various asset classes; potential disruptions in proper functioning of financial markets; and rapid changes in policy, technology, and consumer preferences that markets have not anticipated.
Pushed on this point, progressives tend to say, “Well, yeah, climate change really is a risk.” But, even if it is, that does not set it within the purview of the Federal Reserve. There are many things that lead to “disorderly price adjustments in various asset classes; potential disruptions in proper functioning of financial markets; and rapid changes in policy, technology, and consumer preferences that markets have not anticipated” — up to and including war — but this does not mean that we should hand over any more power than we already have to the Federal Reserve. It is not the Fed’s job “to bring about the adoption of practices and policies that will allocate capital and align portfolios toward sustainable investments,” and that Raskin has so much as hinted otherwise should be enough to kill her nomination.
In fact, it should be enough to do much more besides. Joe Manchin is correct when he says that “the time has come for the Federal Reserve Board to return to its defining principles and dual mandate of controlling inflation by ensuring stable prices and maximum employment,” but if he’s serious about it, he can do more than help play whack-a-mole against bad nominees. The Federal Reserve is ultimately a creature of Congress. Upon its creation, Congress handed it a great deal of independence in order to reduce the risk of political interference. For the Fed to take that independence and use it to pursue an agenda that — despite a little camouflage — is essentially political in nature makes a mockery of the very reason it was handed that independence in the first instance. There is considerable value in an independent central bank, but that value is diminished when “independent” is transmuted into “rogue.” If Joe Manchin and others are worried about that eventuality, they have the power to prevent it.
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