Saturday, January 29, 2022

Biden selects 3 members of the Fed Council, including the first black woman

WASHINGTON (AP) — President Joe Biden will nominate three people to the Federal Reserve Board of Governors, including Sarah Bloom Ruskin, a former Fed and Treasury official, for the highest regulatory position and Lisa Cook, who will be the first black woman to serve. on the Fed’s advice.

Biden will also nominate Philip Jefferson, an economist, faculty dean at Davidson College in North Carolina and a former Fed researcher. The three candidates, who must be confirmed by the Senate, will sit on the Fed’s seven-member board.

Candidates will join the Fed at a particularly challenging time as the central bank takes on the delicate task of raising its benchmark interest rate to try to rein in high inflation without undermining the recovery from the pandemic downturn. The government said on Wednesday that inflation reached its highest level in four decades in December. Inflation has become the biggest problem in the economy, a burden on millions of American households and a political threat to the Biden administration.

Raskin’s nomination to the Fed’s position as Fed Vice Chair for Supervision – the country’s top bank regulator – will be welcomed by progressive senators and advocacy groups, who believe she is likely to take a tougher approach to banking regulation than Trump’s nominee Randal Quarles, who stepped down. down from this post last month. She is also seen as a person committed to incorporating climate change considerations into the Fed’s oversight of banks. However, for this reason, she has already aroused opposition from some Republican senators.

A Harvard-trained lawyer, Raskin, 60, previously served on the Fed’s seven-member board from 2010 to 2014. She was then selected by President Barack Obama to serve as Deputy Secretary of the Treasury, the second-best position in the ministry.

As Fed governors, Raskin, Cook and Jefferson will vote on interest rate policy decisions at eight annual meetings of the Fed’s policy making committee, which also includes the 12 presidents of the Fed’s regional banks.

Raskin’s first term as Fed Governor followed her tenure as Maryland’s Commissioner of Financial Regulatory Affairs. Prior to her public service, Raskin worked as a lawyer for Arnold & Porter, a well-known Washington firm, and as a managing director for Promontory Financial Group.

Kathleen Murphy, CEO of the Massachusetts Bankers Association, worked with Ruskin when Raskin was Maryland’s banking regulator from 2007 to 2010, with Murphy leading the Maryland bankers’ group. Murphy said the state’s financial industry considers her “a strong regulator, but a fair regulator.”

“She always had a very collaborative approach,” Murphy said. “She wanted all voices to be at the negotiating table when making decisions.”

However, Raskin is likely to draw criticism for his progressive views on climate change and the oil and gas industry. Two years ago, in an opinion column in The New York Times, she criticized the Fed’s willingness to support lending to oil and gas companies as part of its efforts to support the financial sector in the midst of a pandemic downturn.

“The decisions the Fed makes on our behalf should help strengthen the economy with more jobs in innovative industries, not support and enrich the dying,” Raskin wrote, referring to oil and gas suppliers.

On Thursday, Senator Pat Toomey, the top Republican on the Senate Banking Committee, criticized Ruskin for “clearly advocating that the Fed allocate capital while denying it to this troubled sector.”

Raskin is married to Rep. Jamie Raskin, a liberal Democrat from Maryland who rose to prominence as a member of the House Judiciary Committee when he filed impeachment charges against President Donald Trump.

If confirmed, Cook, along with Jefferson, would become the fourth and fifth black members of the Fed’s Board of Governors in its 108-year history. She has been a professor of economics and international relations at Michigan State since 2005. She was also a staff economist on the White House Council of Economic Advisers from 2011 to 2012 and was an adviser to the Biden-Harris transition team at the Fed and Bank. regulatory policy.

Cooke is best known for her research on the impact of racial violence on African American inventions and innovations. A 2013 article she wrote concluded that racially motivated violence, while undermining the rule of law and threatening personal safety, reduced the issuance of patents to black Americans by 15% annually between 1882 and 1940—a loss that, like she found also holding back the US economy as a whole.

In an interview in October, Cook said that despite support from prominent economists such as Milton Friedman and George Akerlof, she struggled for years to get the article published. Major economics journals tend not to cover “patents, economic history, or anything related to African Americans,” she said.

Cooke has also been a supporter of black women in economics, a profession that is noticeably less diverse than other social sciences. In 2019, she wrote a column in The New York Times arguing that “economics is neither a welcoming nor supportive profession for women” and “particularly hostile to black women.”

To combat these issues, Cook has spent time educating young black women in economics, directing a summer program run by the American Economic Association, and receiving a mentoring award in 2019.

Jefferson, who grew up in a working-class family in Washington, D.C., has focused his research on poverty and monetary policy, according to an interview with the American Economic Association. In a 2005 article, he concluded that the benefits of a hot economy from reducing unemployment among low-skilled workers outweigh the costs, including the risk that companies will adopt automation when labor becomes scarce.

AP writer Josh Boak of Washington contributed to this report.

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