Obama’s Treasury Secretary Lew urges Senate to confirm Fed nominees amid Ukraine crisis and inflation
Former Treasury Secretary Jack Lew.
Heidi Gutman | CNBC
Former Treasury Secretary Jacob Lew has urged Senate leaders to confirm President Joe Biden’s nominees to the Federal Reserve as soon as possible to help contain additional inflationary pressures caused by the US invasion of Ukraine. Russia.
Failure to do so, he wrote in a letter sent Wednesday, could risk harming the country’s economic recovery from the Covid-19 pandemic as well as the financial security of American families as prices rise. eating into their savings.
“As Russia’s unwarranted assault on Ukraine threatens to escalate global economic turmoil, drive up energy costs and deepen the inflation crisis, it is more important than ever that the Senate immediately confirm the complete list,” Lew wrote. He addressed the letter to Senate Leaders Chuck Schumer, DN.Y., and Mitch McConnell, Republican of Kentucky.
Senate Republicans, who are blocking the nomination of Biden Fed nominee Sarah Bloom Raskin, have doubled down on their opposition in a separate letter to the President as of Wednesday.
The two letters come as the ongoing war in Ukraine pushes the prices of several key commodities, including crude oil and wheat, to multi-year highs. The contract price for U.S. oil hit its highest level since 2008 on Thursday at $116.57 a barrel, while wheat futures settled at $10.59 a bushel on Wednesday, the highest since 2008.
Such steep jumps in commodity prices and the uncertainty posed by armed conflict in Europe make the Fed’s role even more important, Lew wrote. Former Treasury Undersecretary for Home Finance Mary Miller and former adviser to Treasury Secretary Antonio Weiss, who both served in the Obama administration, co-signed the letter.
“As our nation continues its economic recovery from the pandemic, faces rising inflation, and faces the end of decades of peace and security in Europe with Russia’s unjust invasion of Ukraine, we need the Federal Reserve at full strength,” Lew and his colleagues wrote.
Fed Chairman Jerome Powell, a Republican nominated for a second term by Biden, addressed the uncertainty caused by the Russian invasion on Wednesday before the House Financial Services Committee. He told lawmakers the central bank plans to raise interest rates by 25 basis points when officials meet later this month.
The Fed is empowered by Congress to adjust interest rates to warm or cool the economy. The central bank sets the so-called federal funds rate, which is the rate at which banks borrow and greatly influences consumer lending rates for everything from credit cards to auto loans.
When inflation is high and employment looks healthy, the central bank typically raises borrowing costs to keep prices from rising too quickly.
Powell is scheduled for a second day of testimony Thursday before the Senate Banking Committee. This hearing is scheduled to begin at 10 a.m. ET.
As much as Lew’s letter warned of the growing economic risks posed by geopolitics, it sought to persuade Republicans to end their ongoing boycott of the Democratic slate.
Lew told Senate Banking Committee Chairman Sherrod Brown, D-Ohio, and GOP ranking member Pat Toomey, Pennsylvania, that Republicans should end their “insane” blockade.
Led by Toomey, Republicans on the committee declined to participate in a vote that would eliminate Biden’s full slate of nominees thanks to concerns over Raskin. Biden tapped the former Fed governor to be the next vice president of the Central Bank for Supervision, one of the most powerful banking regulators in the country.
At first, many Republicans said they were skeptical of Raskin’s public remarks calling on federal regulators to loosen their administrative powers to pursue policies aimed at curbing climate change. Senator Brown and the White House say Raskin and his views on climate change will be a welcome addition to the Fed and help it study how climate change affects financial institutions.
But more recently, the GOP has focused its concern on Raskin’s previous work as a board member of a little-known fintech company, Reserve Trust. Toomey and her colleagues say Raskin misused her influence as a former Fed governor and assistant treasury secretary when she tried to gain special central bank access on behalf of the Reserve Trust in 2017.
They reiterated those concerns in a letter to Biden dated Wednesday, in which they again noted that they would be open to a vote to advance the president’s other four nominees: Powell, Lael Brainard, Lisa Cook and Philip Jefferson.
“To be clear, our actions were directed only at Ms. Raskin, as we offered to advance the nomination process for all other slated candidates for tagging,” the GOP senators wrote. “Without a better understanding of Ms. Raskin’s past activities, we cannot, in good faith, support the advancement of her nomination process.”
It appears to be a no-start for the Democratic majority, which has so far insisted that all five candidates be voted on at the same time.