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sarah bloom raskin
After Progressive Pick Forced Out, Biden Taps Crypto-Linked Michael Barr for Top Bank Regulator Job
"Barr can't be trusted to make enemies of the old banks or the new fintechs when necessary for the safety and soundness of the financial system," said one progressive critic.
Apr 15, 2022
A month after climate campaigners condemned Sen. Joe Manchin for refusing to support the nomination of Sarah Bloom Raskin to a top Federal Reserve post, government watchdogs are warning that the president's choice of a replacement nominee, Michael Barr, has close ties to industries that could be responsible for "the next financial crisis."
"When it comes to the cryptocurrency and fintech industries, which some believe could be responsible for the next crash, concerns about the revolving door have too often been waved away."
President Joe Biden on Friday announced he would nominate Barr to serve as the vice chair of supervision on the Federal Reserve Board of Governors, a position in which he would regulate big banks as well as other financial innovations.
Barr is currently a law professor at the University of Michigan and previously worked in the Treasury Department, where he helped to pass the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010.
While Barr was instrumental in creating the Consumer Financial Protection Bureau (CFPB), appeared in February with progressive Sen. Elizabeth Warren (D-Mass.) for a discussion about economic inequality, and has secured the support of Senate Banking Committee chairman Sen. Sherrod Brown (D-Ohio), the Revolving Door Project warned that much of Barr's past and current work has not prepared him to protect the American public from reckless activities of financial firms.
Writing for the organization on Thursday, Eleanor Eagan and Timi Iwayemi noted that Barr is currently an advisor at NYCA Partners, which invests in "fintech"--mobile applications and other technologies that automate financial transactions--and a member of the advisory council for the Alliance for Innovative Regulation, a think tank which has received funding from fintech and cryptocurrency firms "and has advocated extreme regulatory reform measures."
\u201cNEW: Biden should close the revolving door *before* captured regulators lay the groundwork for a financial crisis. \n \nNominating Michael Barr, who's closely associated w/ crypto & fintech, for Fed Vice Chair of Supervision would be a very bad start\n \nhttps://t.co/mLuF2sUENV\u201d— Revolving Door Project (@Revolving Door Project) 1649959608
In the years preceding the 2008 financial meltdown, wrote Eagan and Iwayemi, "regulators who came from the country's largest banks and planned to promptly return to them removed regulatory restraints and turned a blind eye to the predictably dangerous effects (see, e.g. Robert Rubin and Alan Greenspan)."
"And yet, as familiar as that story has become, many appear not to have learned its lessons," they added. "When it comes to the cryptocurrency and fintech industries, which some believe could be responsible for the next crash, concerns about the revolving door have too often been waved away."
Last year, Jon Cunliffe, the Bank of England's deputy governor for financial stability, warned that digital assets "have no intrinsic value and are vulnerable to major price corrections," and pose a concern to financial stability.
The rate of growth in the cryptoasset market, Cunliffe said, is comparable to the $1.2 trillion subprime mortgage market in 2008.
"When something in the financial system is growing very fast, and growing in largely unregulated space, financial stability authorities have to sit up and take notice," he said.
As David Dayen wrote at The American Prospect Thursday, in addition to his ties to cryptocurrency, Barr served as an advisor for peer-to-peer lending firm the Lending Club, which was called "predatory" by the Cleveland Fed in 2017, and was a key architect of the Home Affordable Modification Program (HAMP), "the failed foreclosure mitigation program that allowed banks to trap borrowers in predatory schemes."
Dayen also noted that former FDIC Chair Sheila Bair wrote in her memoir about Barr's push to eliminate strong regulations for derivatives and weaken the Volcker Rule, which attempted to stop banks from using customers' money to engage in risky trading.
"While Barr was a true ally in the fight for creating the Consumer Financial Protection Bureau," said Jeff Hauser, executive director of the Revolving Door Project, "when it came to shifting the economic structure of Wall Street itself, he was a proud supporter of the 'Too Big to Fail' bailout-heavy status quo. Putting Barr in charge of regulation at the Fed, the institution which bails out banks in the first place, would torpedo any notion that Democrats have learned from that error in judgment."
Barr's nomination contrasts with that of Raskin earlier this year. Raskin, who withdrew her nomination after it became clear Manchin (D-W.Va.) would join Republicans in opposing her, drew right-wing ire for her call for regulators to hold banks accountable for their contributions to the climate crisis.
Last year, the Revolving Door Project had urged Biden to nominate Raskin to the vice chair of supervision role to "minimize [former President Donald] Trump's deregulatory Federal Reserve legacy."
By contrast, "Barr can't be trusted to make enemies of the old banks or the new fintechs when necessary for the safety and soundness of the financial system," Hauser said this week. "We need a VC-S who looks out for the people and the economy, not for his own career."
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'Disgraceful': Oil-Soaked Senators Force Out Bloom Raskin Over Climate Stance
"By blocking a Fed nominee for not being pro-fossil fuel enough, Joe Manchin is loudly saying to America two simple words: Drop dead. Good to know he's fine with the coming environmental apocalypse."
Mar 15, 2022
Sarah Bloom Raskin withdrew her nomination as Federal Reserve vice chair for supervision on Tuesday, prompting progressive condemnation of the fossil fuel-funded U.S. senators--especially right-wing West Virginia Democrat Joe Manchin--who fiercely opposed her prospective appointment.
"Days before helping Republicans sink Sarah Bloom Raskin's Fed nomination, Joe Manchin told fossil fuel executives that they should seek a 'return on investment' from the politicians they fund."
The Washington Postreports that the White House confirmed Bloom Raskin--a former deputy secretary at the U.S. Treasury Department and member of the Federal Reserve's governing board during the Obama administration--would decline her nomination amid what she has described as "relentless attacks by special interests" spooked by her candid admissions that the climate emergency threatens economic stability.
"It was--and is--my considered view that the perils of climate change must be added to the list of serious risks that the Federal Reserve considers as it works to ensure the stability and resiliency of our economy and financial system," Bloom Raskin wrote in a letter to U.S. President Joe Biden explaining her decision.
"This is not a novel or radical position," she continued. "Any vice chair for supervision who ignored these realities--which are manifesting every day across this country--would be guilty of gross dereliction of duty."
\u201cBy blocking a fed nominee for not being pro fossil fuel enough, Joe Manchin is loudly saying to America two simple words:\n\nDrop Dead.\n\nGood to know he\u2019s fine with the coming environmental apocalypse.\nhttps://t.co/MkuOC33F1U\u201d— Alex Morash (@Alex Morash) 1647372652
Bloom Raskin's stance is in line with official policy statements from various U.S. government agencies including the Department of Defense, as well as central banks around the world and a growing number of corporations.
In a statement addressing accusations that Bloom Raskin is too "radical" for the job, Biden said that "unfortunately, Senate Republicans are more focused on amplifying these false claims and protecting special interests than taking important steps toward addressing inflation and lowering costs for the American people."
\u201cSarah Bloom Raskin\u2014a Fed Governor, Deputy Treasury Secretary, Maryland Banking Commissioner\u2014is an honorable public servant. She had the courage to call out the financial risks of climate change, so the fossil fuel industry and special interests brought her down. It\u2019s shameful.\u201d— Elizabeth Warren (@Elizabeth Warren) 1647375302
However, it was opposition from Manchin--who has taken hundreds of thousands of dollars in fossil fuel industry campaign contributions and made at least hundreds of thousands more from his family's coal business--in an evenly divided Senate that proved fatal to Bloom Raskin's confirmation prospects.
"Days before helping Republicans sink Sarah Bloom Raskin's Fed nomination, Joe Manchin told fossil fuel executives that they should seek a 'return on investment' from the politicians they fund," The New Republic's Kate Aronoff tweeted. "Guess they listened!"
\u201cThere was literally no reason to not confirm her other than the fact fossil fuel companies hated her because she believes climate change is happening and will produce some financial risks. That\u2019s it! They killed her nomination for that.\u201d— Chris Hayes (@Chris Hayes) 1647372202
The progressive group Indivisible lamented, "It's absurd that a qualified nominee who had been unanimously confirmed by the Senate to a similar role can't get confirmed now simply for acknowledging climate change."
David Arkush, climate program managing director at the consumer advocacy group Public Citizen, said in a statement that "as climate harms push into an ever-larger proportion of our social and economic lives, so too does climate denial."
"At the behest of the oil and gas industry, Senate Republicans and Sen. Manchin smeared and killed the nomination of the most qualified person in the country to lead the U.S. through our present economic and financial stability challenges as vice chair for supervision because she had the temerity to voice aloud simple realities around climate change that most regulators agree with," he asserted. "Their behavior is disgraceful."
Arkush continued:
A mainstream nominee if there ever was one, Bloom Raskin has the support of consumers, civil rights groups, unions, businesses, and banks. She was confirmed twice by the Senate unanimously and has widespread, bipartisan support in the real world. But not in today's U.S. Senate, where the fossil fuel industry gives new meaning to the phrase scorched earth.
"It is no surprise that people who are destroying humanity's livable habitat are also willing to imperil financial stability and the broader economy by depriving the country of outstanding leadership in a time of multiple overlapping crises just to make a point," Arkush added. "But it is a new low."
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In Latest Climate Obstruction, Manchin Refuses to Support Sarah Bloom Raskin for Fed
Raskin is "super qualified, would be good at the job, but Manchin's corporate donors don't love her," said one critic. "That's what's really going on."
Mar 14, 2022
Sen. Joe Manchin infuriated progressives on Monday as he announced his refusal to support President Joe Biden's nomination of Sarah Bloom Raskin to a key position at the Federal Reserve--only the latest of the West Virginia senator's obstructions of his own party's climate action agenda.
No Republicans have indicated that they might support Raskin's nomination to serve as vice chair of supervision at the Fed, a role in which she would be the agency's top banking regulator. Without Manchin's support in the evenly-split U.S. Senate, Raskin's nomination is likely doomed.
"The fossil fuel industry gave more money to Manchin than anyone else in D.C. The return on that modest investment has been staggering."
Manchin suggested that the former Obama administration official's call for action regarding banks' climate risks as they pour trillions of dollars into fossil fuel projects.
"Her previous public statements have failed to satisfactorily address my concerns about the critical importance of financing an all-of-the-above energy policy to meet our nation's critical energy needs," Manchin said of Raskin Monday. "I have come to the conclusion that I am unable to support her nomination to serve as a member of the Federal Reserve Board."
Raskin wrote in a column last year that U.S. bank regulators must "leave their comfort zone" and begin regulating how financial institutions are contributing to the planetary emergency by funding fossil fuel emissions.
"They need to ask themselves how their existing instruments can be used to incentivize a rapid, orderly, and just transition away from high-emission and biodiversity-destroying investments," Raskin wrote.
Republicans on the Senate Banking Committee have boycotted a hearing to advance several nominations for Federal Reserve positions, saying they object to Biden's selection of Raskin due to her comments about the climate and accusing her of impropriety when she served on the board of a payments firm.
On Monday, the White House said it would continue to seek Raskin's confirmation, adding that she has been targeted by an "unprecedented, baseless campaign led by oil and gas companies that sought to tarnish her distinguished career."
As Jane Mayer wrote in The New Yorker earlier this month, fossil fuel companies, fearing that at the Fed Raskin could identify the climate crisis as a long-term systemic risk to the economy and regulate accordingly, have led right-wing senators in their campaign to stop Raskin's confirmation:
The industry's fears were made clear at the end of January, when a coalition of forty-one energy-business trade associations that opposed Bloom Raskin's nomination wrote a letter to the committee in which they called Bloom Raskin "a strong advocate for debanking" fossil-fuel companies... In their letter, the associations called Bloom Raskin an environmental "alarmist" with "a crisis mentality" because she has stated that climate change could result in "an unlivably hot planet."
The U.S. Chamber of Commerce--which counts among its board members executives from natural gas company ConocoPhillips, a top contributor to Manchin this year, and other fossil fuel firms--also wrote to the committee warning senators to reject Raskin.
Climate advocates including Bill McKibben linked Manchin's ties to the fossil fuel industry with his decision to block Raskin's confirmation.
\u201cThe fossil fuel industry gave more money to Manchin than anyone else in DC.\nThe return on that modest investment has been staggering.\nAnd Biden's inability to get his vote has pretty much gutted the administration's climate plans. \nhttps://t.co/4RjBgolpVv\u201d— Bill McKibben (@Bill McKibben) 1647277196
Raskin is "super qualified, would be good at the job, but Manchin's corporate donors don't love her," said Faiz Shakir, founder of pro-worker media outlet More Perfect Union. "That's what's really going on."
Last year, Manchin forced Democrats to eliminate key climate provisions including a methane fee and the Clean Electricity Performance Program from the Build Back Better Act, before announcing he would not support the drastically cut package.
Kate Aronoff, climate reporter for The New Republic, noted that Manchin attended CERAWeek, an annual meeting of fossil fuel executives and politicians, last week. As Russia's military assault on Ukraine continues, a key message pushed by attendees was the need to develop "energy independence" in the U.S.--while continuing the dominance of the oil and gas industry as other wealthy countries shift toward renewable sources.
As Aronoff reported last week, Manchin urged the executives assembled at the conference to seek a "return on investment" when they talk to politicians about policy.
"Demand more," he said. "If you do that you all can turn this around."
\u201cOn Friday Joe Manchin spoke to a crowd of oil and gas industry executives. On Monday he came out against Sarah Bloom Raskin's Fed nomination, which has been controversial mainly because of her stance on climate related financial regulation. \n\nI'm sure these things are unrelated!\u201d— Kate Aronoff (@Kate Aronoff) 1647276170
"I'm sure these things are unrelated!" Aronoff said of Manchin's CERAWeek appearance and his objection to Raskin.
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