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Republican Attacks On Biden’s Fed Nominees Are Out of Touch with Reality

President Biden's nominees are exceptionally qualified candidates who enjoy broad-ranging support and should be confirmed expeditiously.

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Wednesday, February 02, 2022

On Thursday at 8:45 am EST, the Senate Committee on Banking, Housing, and Urban Affairs will hold a confirmation hearing for three members of President Biden’s proposed slate of nominees for The Federal Reserve Board of Governors.

These nominees are exceptionally qualified candidates who enjoy broad ranging support and should be confirmed expeditiously. Key points to note ahead of tomorrow’s hearing:

The Washington Post Editorial Board said these nominees “are ready to help lead the Fed and bolster its credibility. The Senate should move quickly to put them in place.”
The Bloomberg Editorial Board described Biden’s slate as “widely accomplished and well qualified.”
This week Senator Joe Manchin applauded all of the nominees on President Biden's slate, calling them “extremely qualified.”
Current Trump-appointed Fed Chair, and nominee for a second term, Jerome Powell has committed to addressing climate-related financial threats as a part of the Fed’s mandate.
Roughly three quarters of likely voters think climate change poses a threat to the U.S. economy, including majorities of Democrats, Independents and Republicans.
By a 33-point margin, likely voters support federal intervention to reduce the risk climate change poses to the economy.
9 out of 10 Chief Risk Officers from 88 financial institutions view climate risk as a top emerging threat in the next five years.
95% of insurers report believing that climate risk translates to investment risk.

Thursday’s hearing will see a slate of highly qualified nominees who are each prepared with unique skill sets that will allow them to excel in their respective roles at The Fed, should they be confirmed. With decades of experience in academia and the public and private sectors, Lisa Cook, Philip Jefferson, and Sarah Bloom Raskin will bring non-partisan competence and a pragmatic approach to bank regulation that will ensure the continued independence of The Fed as an institution. Republicans and Democrats alike have praised their preparedness to lead the Fed, with Senator Joe Manchin describing them as “extremely qualified.” The slate of nominees put forth by President Biden is one that’s historically diverse, with the nomination of the first-ever African-American woman to serve, and only the fourth appointment for an African-American man. These are long overdue appointments that will reflect the true makeup of our nation and the American economy.

Yet despite their impressive resumes and praise from leading economists and former colleagues alike, there have already been signals that these nominees will face bad-faith attacks from elected officials in the pocket of the fossil fuel industry at tomorrow’s hearing. Despite what you’re likely to hear from climate-denying Senators tomorrow, those attacks are completely out of step with business leaders, banks, economists, everyday Americans, and even Republican appointed former Fed Governors, who all recognize the threat that the climate crisis poses to our financial system, and are calling for more action and guidance from financial regulators to protect our economy.

Taking action to protect our financial system from the threat of climate related-financial risk is not only within the Fed’s purview, but is in fact necessary to fulfill the central bank’s mandate to address emerging risks and protect financial stability. As current Fed Chair Jerome Powell explained, “Climate is appropriate for us [The Fed] as an issue to the extent it fits within our existing mandates, in the sense of it’s another risk over time that banks are going to run.” Biden’s slate of nominees to the Board of governors are eminently qualified, and prepared to tackle the emerging risks that threaten to destabilize our economy. They should be confirmed without delay.

Financial Institutions Are Calling For More Guidance From Regulators

Amidst ongoing inflation concerns and economic ramifications from the Covid-19 pandemic, the financial sector is looking for leaders at the Fed who will be committed to fighting inflation and maintaining stability, while protecting against potential threats that are on the horizon. Financial institutions recognize the threat posed by climate change and are actively soliciting clear, comprehensive guidance from the federal government to be responsible fiduciaries to their clients in a world of ever-increasing climate risk. That’s why industry groups like the American Bankers Association have welcomed Biden’s slate of nominees.

In a survey of Chief Risk Officers from 88 financial institutions, nine out of ten agree that climate risk is a top emerging threat in the next five years. This comes as 95% of insurers report believing that climate risk translates to investment risk, and 215 of the biggest global companies, representing $17 trillion in market capitalization, reported almost US $1 trillion at risk from climate impacts—with many likely to hit within the next five years.

In a letter to other CEOs, BlackRock CEO Larry Fink put it plainly: “Capitalism has the power to shape society and act as a powerful catalyst for change. But businesses can’t do this alone, and they cannot be the climate police. That will not be a good outcome for society. We need governments to provide clear pathways and a consistent taxonomy for sustainability policy, regulation, and disclosure across markets.”

Republican Economic Experts Acknowledge the Need to Address Climate Risk—And Support Biden’s Slate

Support for regulatory action on climate risk is bipartisan, and President Biden’s slate of nominees is up to the task. Current Trump-appointed Fed Chair, and nominee for a second term, Jerome Powell has committed to addressing climate-related financial threats, affirming that “Climate change poses significant challenges for the global economy and the financial system.” Former Fed Vice Chair for Supervision Randy Quarles, another Trump nominee, argued for the establishment of international initiatives to improve monitoring and mitigation of climate related financial risk across markets.

Due to their impressive qualifications and preparedness to take on emerging economic threats, Biden’s slate of nominees has earned the support of top Republican financial regulators and experts from previous administrations. Glenn Hubbard, Chair of President George W. Bush’s Council of Economic Advisors, had glowing remarks for the nominees. And former Fed Board of Governors Betsy Duke, another Bush appointee, called the baseless attacks being lobbed at Biden’s nominees by Republicans in the Senate “simply false.” President Biden’s slate will maintain the independence of the Fed while prioritizing economic growth that benefits all Americans—issues that are important to both Democrats and Republicans. As former Bush administration White House and Treasury official Tony Fratto put it, “this group deserves easy Senate confirmation.”

Voters Want Action On Climate-Related Financial Risk

You don’t need to be an economist or a banker to know that climate change poses an economic threat. Everyday people know that the climate crisis is an economic issue because they’re experiencing its impacts in their own backyards. Last year more than 40% of Americans lived in a county that was hit by a climate disaster. A recent poll from Data For Progress found that voters understand that the climate crisis is an economic crisis in the making. Roughly three quarters of likely voters think climate change poses a threat to the U.S. economy, including majorities of Democrats, Independents and Republicans.

And voters want regulators to take action to mitigate climate-related financial risk. By a 33-point margin, likely voters support federal intervention to reduce the risk climate change poses to the economy.

Data for Progress’ polling also found that voters have limited trust in the federal government’s ability to prevent a financial crisis, with 56% of likely voters reporting they have “none at all” or “not much” confidence that the federal government can prevent one. After living through the Great Recession of 2008, most Americans know exactly what can happen when regulators are asleep at the wheel and fail to address emerging risks. President Biden’s slate of nominees to the Fed would usher in a new era of sound leadership that will prioritize maintaining stability in our economic system, and could begin to rebuild voter confidence in America’s top financial regulators.

The Takeaway

The bad-faith attacks that you’re likely to see in Thursday’s confirmation hearings aren’t supported by leading economists, smart business leaders or the American people. They’re just cheap shots fueled by special interest talking points. It’s clear to the experts in the field: climate change is an undeniable emerging threat to the stability of our economic sector, and if we are going to prevent economic devastation, we must act. President Biden’s slate of nominees to the Federal Reserve Board of Governors are prepared to do that. Now, it’s up to Congress to confirm President Biden’s full slate of nominees and put the Fed on the path to protecting Americans against the most dire economic threats of our era.

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