Biden needs to double down on banking oversight

Crony capitalism at its worst.

Banks and the coal-mining industry, with the help of lobbyists, blocked Joe Biden’s appointment of Sarah Bloom Raskin — a former deputy Treasury Secretary and member of the Fed board during the Obama years — as the Fed’s primary regulator to oversee the banking industry.

Sen. Patrick J. Toomey (R-Pa.) and other GOP lawmakers have attacked her view that the Fed should do more to mitigate the financial risks of climate change, including by potentially changing the way it regulates energy producers. (Washington Post)

Democrat Senator Joe Manchin’s opposition was the final straw, adding to the Republican stonewall. Manchin’s West Virginia constituency boasts a strong coal mining industry and the Senator is heavily supported by coal-mining donors.

March 15 (Reuters) – Sarah Bloom Raskin on Tuesday withdrew as President Joe Biden’s nominee to become the top bank regulator at the Federal Reserve, one day after a key Democratic senator and moderate Republicans said they would not back her, leaving no path to confirmation by the full Senate.

“Despite her readiness — and despite having been confirmed by the Senate with broad, bipartisan support twice in the past — Sarah was subject to baseless attacks from industry and conservative interest groups,” Biden said in a statement.

Raskin had become the most contentious of Biden’s five nominees to the central bank’s Board of Governors, generating strong opposition from the outset from Republicans who said she would use the vice chair of supervision post to steer the Fed toward oversight policies that would penalize banks who lend to fossil fuel companies.

Raskin had been favored by progressive Democrats, such as Senator Elizabeth Warren of Massachusetts, who had pushed Biden to install someone who would pursue stiffer banking oversight after regulatory rollbacks under the previous supervision czar, Randal Quarles.


Joe Biden’s administration should not be deterred from appointing a tough regulator to oversee the banking industry. Many bankers would argue the opposite — that the economy would benefit from light regulation of the industry — but their track record says otherwise.

The banking industry is one of the key vulnerabilities in an already fragile financial system. Failure to effectively regulate them would risk another financial crisis, especially with current global volatility.