GOP boycotts Biden Fed nominees’ vote as bank fights inflation

Republican senators blocked votes on President Biden’s five Federal Reserve nominees Tuesday, leaving the future of the central bank in question amid surging inflation. 

Each of the 12 Republican members of the Senate Banking Committee boycotted a Tuesday meeting where the panel was set to vote on Biden’s five Fed nominees, along with his pick to lead the Federal Housing Finance Agency (FHFA). Their refusal to attend the meeting meant the panel did not have a quorum, a sufficient number of senators present to hold a vote on nominees under Senate rules. 

Sen. Sherrod Brown (D-Ohio), chairman of the Banking panel, said he would delay the votes until Republicans agreed to consider Sarah Bloom Raskin’s nomination to be the Fed’s regulatory chief along with Biden’s other four Fed picks. 

“Republicans have fled the room hiding rather than voting on a fair and experienced nominee,” Brown said Tuesday in remarks before a brief meeting exclusively attended by Democrats. 

“I urge my Republican colleagues to return to the table and to vote their conscience. Let them vote ‘no’ if that’s what they believe, but make them vote and let the Senate fulfill its solemn duties,” he said before announcing the delay. 

Sen. Pat Toomey (Pa.), the top Republican on the Banking panel, said Tuesday morning he and his GOP colleagues would block the vote on all five of Biden’s Fed nominees because Democrats refused to take Raskin off Tuesday’s slate.  

In a Tuesday statement announcing the boycott, Toomey claimed Raskin had provided insufficient and misleading answers about her history on the board of a payments company that obtained access to the Fed’s payment processing system. 

Despite being confirmed unanimously for her previous stints at the Fed and Treasury, Raskin was unlikely to get any Republican support to become the Fed’s top regulatory official.  

GOP senators have argued she would use the Fed’s immense power to penalize the fossil fuel industry, citing her opposition to allowing pandemic emergency loans for oil and gas firms and previous calls to pay closer attention to climate-related financial risks. 

Toomey insisted the Republican blockade was not related to her policy views, which he called disqualifying, but rather questions about her work history. 

Raskin served on the board of financial firm Reserve Trust from 2017 to 2019 after stints as a member of the Fed board and as Treasury deputy secretary during the Obama administration.  

She helped the company receive approval to use the Fed’s payment rails during that time after an initial application was rejected by the Federal Reserve of Kansas City, one of the system’s 12 regional banks. 

The Kansas City Fed and Reserve Trust each said Raskin played no role in helping the company overcome regulatory hurdles but rather guided the firm as it changed its business model to comply with federal regulations. 

“We just want to understand what happened here, and we’re getting no answers whatsoever. That’s not acceptable,” Toomey told reporters at the Capitol. 

Toomey added that Republicans were fine with advancing Biden’s other four Fed nominees — Fed Chairman Jerome Powell, Fed Vice Chair nominee Lael Brainard and Fed board nominees Lisa Cook and Phillip Jefferson — and that some would get bipartisan support. 

But Brown said during the Tuesday meeting that Raskin fully answered more than 180 follow-up questions from Republican senators after her confirmation hearing earlier this month.  

“They’re now objecting to voting on a nominee because they don’t like the answers she provided. It’s just a delay tactic,” Brown said. 

Republicans have zeroed in on Raskin’s nomination as the most vulnerable among Biden’s Fed nominees. While Powell, Brainard and Jefferson have already locked down some bipartisan support, Raskin’s views on climate-related financial risks were seen as a risk to alienate some moderate Democrats essential to her confirmation. 

Even so, the Republican gambit appeared to solidify Democratic support for Raskin among Banking panel moderates. 

Sen. Jon Tester (D-Mont.), a red-state moderate who previously announced his support for Raskin, urged Brown to hold a vote anyway “just to prove to the constituents of these folks” that “they’re not showing up to do their constitutional duty.” 

Sen. Mark Warner (Va.), another moderate Democrat, said he was “disappointed in my Republican friends,” particularly after he took backlash from his own party by backing some of former President Trump’s Fed nominees. 

“We’ve had spirited debates over the years. The chairman and I have disagreed on issues, but we’ve always shown up and done our job, and I hope this is a one momentary exception and not a rule,” Warner said. 

It is unclear when the Banking panel will consider Biden’s five Fed nominees or his pick to lead the FHFA, or if the committee will break up the committee’s votes on the nominees to fill out some of the vacant positions. 

The GOP blockade of Biden’s Fed nominees comes as the central bank is preparing to begin a series of interest rate hikes to help quell rising prices. Annual inflation hit 7.5 percent in January, according to Labor Department data, the highest rate since February 1982. 

“Such an extreme step would be totally irresponsible at a time when it’s never been more important to have confirmed leadership at the Fed to help continue our recovery and maintain price stability,” said White House press secretary Jen Psaki after Toomey announced the planned boycott. 

Senate Minority Leader Mitch McConnell (R-Ky.) said that the GOP blockade was a message to Biden to pick nominees that are closer to the political main stream.  

“These are highly controversial nominees, extremely controversial, who heatedly expressed the view that the Fed should be involved in things that are not the Fed’s responsibility. The best way for this to stop is for the president to quit sending up these kinds of nominees,” he said Tuesday 

The Fed will still be able to conduct its core responsibilities of adjusting monetary policy and overseeing the U.S. financial system without Biden’s picks confirmed. 

Powell is currently serving as acting chairman, but both Fed vice chairmanships will remain vacant until nominees are confirmed. Powell serves on the Fed board along with Brainard, the sole Democrat, and Trump nominees Michelle Bowman and Christopher Waller.