Testifying before the Senate Banking Committee today, Sarah Bloom Raskin—President Biden’s nominee to serve as vice chairwoman for supervision at the Federal Reserve—said that she would not seek to use her authority to reallocate capital away from the energy sector. Responding to concerns about her views on banks’ funding of oil and gas-related businesses, Raskin stated emphatically that “it is inappropriate for the Fed to make credit decisions and allocations,” and that “banks choose their borrowers, not the Fed.” Additionally, supervisory and regulatory actions “must always stay within the bounds of the law,” she said.
Raskin has come under fire from some Republicans on the banking committee in recent days for her previous writings and speeches in which she seemed to support using the regulatory apparatus to redirect investment away from industries that, in her view, are contributing to climate change. In 2020, for example, Raskin wrote that the “transformation [toward a net-zero carbon economy]will come, in part, from urging the leaders of 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.”
In her testimony, however, Raskin tempered her comments. “Whether we’re talking about the risks of cyberattacks or climate-related extreme weather events, the job of the bank regulators is to make sure the banking system has appropriately accounted for those risks and can manage them,” she told lawmakers.
Raskin also noted that “regulation is best achieved when it is collaborative,” and said she would work “to bring all interested parties and experts to the table and listen carefully” before making important regulatory policy decisions. “Supervision, regulation cannot be done with one voice alone,” she said. “You need the voices of many. And the many include not just experts . . . but the people who live it day to day.”
A former Maryland bank commissioner during the 2008 financial crisis, Raskin said that as a supervisor, “the bankers in Maryland were my indispensable partners” during that time and that “it was the bankers that strengthened my sense, not just in the value of collaboration and in the value of working together to achieve good ends, but in the importance of community banks.”
She added that “community banks are one of the finest features we have in our financial sector. They provide safe and sound financial intermediation, they understand the community, the economies that they lend into in a way that keeps them very sensitive and very attuned to what communities need.”