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Fed Standoff a Waiting Game With Democrats Out of Easy Options

(Bloomberg) — President Joe Biden and Senate Democrats are standing by Sarah Bloom Raskin and are ready to wait out Republicans in a standoff that’s holding up a slate of five Federal Reserve nominees. 

Senate Banking Chairman Sherrod Brown of Ohio said the panel plans to keep holding meetings to vote on the nominees in the hopes Republicans will take part. He said Biden is backing the strategy.

“I spoke to the president today,” he said. “He’s concerned but standing strong with us. They’re going to eventually show up. We’re going to keep scheduling meetings until they show up.”

Brown’s comments came one day after Banking Committee Republicans boycotted a meeting, forcing Democrats to shelve plans to vote on all five of Biden’s Fed nominees because there wasn’t a required quorum. 

Senator Pat Toomey of Pennsylvania, the committee’s top Republican, reiterated Wednesday that Raskin, the nominee for vice chair of supervision, must provide more answers about her involvement in fintech company Reserve Trust getting a valuable Federal Reserve master account while she was a director. 

Raskin has said she doesn’t recall helping the company on that issue. If she did, she said, it would have been done properly. The White House said she did nothing wrong, and that Reserve Trust received an account only after complying with applicable rules and regulations.

Toomey reiterated that Republicans are willing to have votes on the other four nominees — Jerome Powell as chair, Lael Brainard as vice chair, and Lisa Cook and Philip Jefferson for the board of governors. In the meantime, he said, the Fed’s ability to conduct monetary policy won’t be affected.

“The Fed is able to fully function,” Toomey said at a Wednesday event with the group No Labels, noting that Powell remains the acting chairman and Brainard is already on the board.

Brown, who said he hadn’t spoken to Toomey yet on Wednesday, said again that he won’t move forward with the other nominees while Toomey holds up Raskin. Doing so, he said, would cede power to the minority over who gets votes and who doesn’t.

“They think they’re calling the shots here, with a Democratic majority? Sorry,” he said.

White House press secretary Jen Psaki said Biden “absolutely” agrees with Brown’s refusal to split up the nominations.

“We believe Republicans need to do their jobs and show up to vote for these nominees,” she said.

Brown said it’s not clear whether Democrats have any procedural path to moving forward without Republicans providing a quorum in the committee.

“I’m still trying to explore this,” he said.

©2022 Bloomberg L.P.


© Bloomberg. The Marriner S. Eccles Federal Reserve building in Washington, D.C., U.S., on Sunday, Dec. 19, 2021. The Federal Reserve chair has tempered his ambition to restore the labor market to its pre-pandemic strength, as the central bank confronts surging inflation and a workforce still constrained by Covid-19. Photographer: Samuel Corum/Bloomberg

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