Senate Republicans Block Vote on Biden’s Fed Nominees

GOP lawmakers registered their opposition to the candidacy of Sarah Bloom Raskin as a top banking regulator

By Andrew Ackerman and Nick Timiraos, WSJ, February 15-16

WASHINGTON—Senate Republicans refused to attend a crucial committee vote on President Biden’s nominees to the Federal Reserve over a disagreement with Democrats on one of the candidates, delaying the confirmation of all five picks, including Chairman Jerome Powell.

Republicans had earlier said they wouldn’t attend a Senate Banking Committee vote on the nominees because of concerns they had with Sarah Bloom Raskin, nominated to serve as vice chairwoman for bank supervision.

“Until basic questions have been adequately addressed, I do not think the committee should proceed with a vote on Ms. Raskin,” Sen. Pat Toomey of Pennsylvania, the committee’s top Republican, said Tuesday ahead of the scheduled vote.

Senate Banking Committee Chairman Sherrod Brown (D., Ohio) accused Republicans of taking steps that could slow the Fed’s ability to respond to economic challenges, including inflation. “Republicans have walked out on the American people,” Mr. Brown said Tuesday at a hearing room with no Republicans present.

Even if Democrats and Republicans resolve the impasse over Ms. Raskin, the path forward for her nomination is tenuous.

Democrats have 50-50 control of the Senate, with Vice President Kamala Harris able to break a tie vote. But because Sen. Ben Ray Luján (D., N.M.) is expected to miss four to six weeks due to a recent stroke, Democrats are temporarily short of a crucial vote on the Senate floor for nominees that lack any Republican support.

Earlier Tuesday, Mr. Brown told reporters he wouldn’t consider Republicans’ request to postpone Ms. Raskin’s vote or separate her vote from the other nominees. “We’re not going to let them cherry pick [and] say, ‘Oh, we’ll vote yes or no on these three nominees, but we’re not going to even vote on these other two,’ ” he said.

Mr. Brown was one of several Democrats who in 2017 boycotted a Senate Finance Committee vote to consider two nominations by then-President Donald Trump, including Steven Mnuchin as Treasury secretary. Republicans changed committee rules that required at least one Democrat to be present before advancing the nominations to the Senate.

Because the current Senate is divided 50-50, Democrats can’t easily change Senate procedural rules that require a majority of any committee to be physically present to advance a nomination to the Senate floor. “So Democrats are boxed in a corner by the GOP boycott,” said Sarah Binder, a political science professor at George Washington University.

Republicans have questioned Ms. Raskin over her tenure on the board of a Colorado payments firm, Reserve Trust. She took that role after serving as Fed governor and a senior Treasury Department official during the Obama administration.

While Ms. Raskin was serving on the company’s board in 2018, it obtained access to Federal Reserve payments systems that traditional banks use to move money around quickly. Republicans have asked Ms. Raskin if she drew on her personal contacts from prior stints in government to help the company.

Ms. Raskin has said that she followed all ethical requirements.

On Tuesday, Mr. Brown said that Ms. Raskin had answered all questions posed by Republicans and that she “has been the subject of an unrelenting smear campaign.”

Ms. Raskin has also been challenged by Republicans over prior statements calling for financial regulators to promote a more rapid transition away from fossil fuels—though Ms. Raskin said at a Feb. 3 hearing that she wouldn’t restrict oil-and-gas companies from financing.

Republicans have indicated they are prepared to back three of Mr. Biden’s Fed picks, including Mr. Powell; Fed governor Lael Brainard, who has been tapped to serve as vice chairwoman; and economist Philip Jefferson, who has been nominated to a 14-year term on the Fed’s board.

Economist Lisa Cook, nominated to serve as a governor on the Fed board, is a professor of economics and international relations at Michigan State University. Dr. Cook has focused her research on policies that promote broad economic opportunity, particularly for racial minorities and women, an approach she could soon bring to the central bank and its policy making.

Some Republicans suggested at the Feb. 3 hearing that Dr. Cook lacked sufficient experience in macroeconomics and monetary policy, a claim she rebutted by highlighting her research experience and work at the Treasury and White House Council of Economic Advisers, where she said she worked on matters related to financial crises.

Mr. Powell, a Republican initially tapped for the top role by President Trump in 2017, is expected to get support from GOP lawmakers, easing his path to confirmation despite opposition from Sen. Elizabeth Warren (D., Mass.). A member of the banking panel, Ms. Warren has said she opposes Mr. Powell’s renomination, citing his effort to loosen financial regulations imposed after the 2008 financial crisis.

Mr. Powell’s four-year term as chairman expired earlier this month, and he has been serving as “chair pro tempore” until the Senate votes on his confirmation.

Ms. Brainard, a sitting governor, would succeed former vice chairman Richard Clarida, who stepped down last month.

Mr. Jefferson, a professor and administrator at Davidson College in North Carolina, isn’t expected to face political opposition to his nomination. Current and former colleagues of Mr. Jefferson describe him as a consensus-oriented, largely apolitical economist with deep knowledge of monetary policy.

At Tuesday’s scheduled vote, 11 of 12 Democrats on the Senate Banking Committee indicated they were prepared to support Mr. Powell’s nomination to a second term as Fed chair, with Ms. Warren opposed. All 12 said they would vote in favor of Ms. Raskin, Ms. Brainard, Ms. Cook and Mr. Jefferson.

It is possible some of the Fed nominees, including Ms. Raskin, would evenly split the banking panel. A tie vote would trigger an additional procedural step, via a motion of Majority Leader Chuck Schumer (D., N.Y.) to bring the nominee to a floor vote.

Under a revised ethics agreement announced last week and negotiated with Ms. Warren, Ms. Raskin said she would extend to four years, instead of two, recusals she would be expected to make while at the Fed for matters involving companies with which she has a previous working relationship. She also agreed not to seek employment or compensation from financial-services companies for at least four years after leaving the government.

Write to Andrew Ackerman at andrew.ackerman@wsj.com and Nick Timiraos at nick.timiraos@wsj.com