Former Treasury Secretary Jacob Lew urged Senate leaders to confirm President Joe Biden’s nominees to the Federal Reserve as soon as possible to help contain added inflationary pressures caused by Russia’s invasion of Ukraine.
Failure to do so, he wrote in a letter sent Wednesday, could risk damaging the nation’s economic recovery from the Covid-19 pandemic as well as the financial security of American families as rising prices eat away at their savings.
“As Russia’s unwarranted assault on Ukraine threatens to cause increased global economic unrest, drive up energy costs, and deepen the inflation crisis, it is more important than ever that the Senate immediately confirm the full slate,” Lew wrote. He addressed the letter to Senate Leaders Chuck Schumer, D-N.Y., and Mitch McConnell, Republican of Kentucky.
Senate Republicans, who are blocking the nomination of Biden Fed nominee Sarah Bloom Raskin, doubled down on their opposition in a separate letter to the president sent Thursday morning.
Both letters come as the ongoing war in Ukraine sends the prices of several key commodities, including crude oil and wheat, soaring to multiyear highs. The price on contracts for U.S. oil climbed to its highest 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 under secretary for domestic finance Mary Miller and former counselor to the Treasury secretary Antonio Weiss, both of whom served in the Obama administration, co-signed the letter.
“As our nation continues its economic recovery from the pandemic, deals with rising inflation, and faces an end to decades of peace and security in Europe with Russia’s unjust invasion of Ukraine, we need the Federal Reserve to be at full force,” Lew and his colleagues wrote.
Fed Chairman Jerome Powell, a Republican nominated to a second term by Biden, spoke about the uncertainty caused by the Russian invasion before the House Financial Services Committee on Wednesday. He told lawmakers that 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 heat up or cool off the economy. The central bank sets the so-called federal funds rate, which is the rate that banks borrow at and greatly influences consumer lending rates for everything from credit cards to auto loans.
When inflation is running hot and employment looks healthy, the central bank will typically hike borrowing costs to keep prices from rising too quickly.
Powell is set for a second day of testimony on Thursday before the Senate Banking Committee. That hearing is scheduled to begin at 10 a.m. ET.
As much as Lew’s letter warned about the rising economic risks posed by geopolitics, it also sought to persuade Republicans to end their ongoing boycott of the Democratic slate of nominees.
Lew told Senate Banking Committee Chairman Sherrod Brown, D-Ohio, and GOP ranking member Pat Toomey of Pennsylvania that Republicans should end their “senseless” blockade.
Led by Toomey, the committee’s Republicans have refused to participate in a vote that would clear Biden’s full slate of nominees thanks to concerns over Raskin. Biden tapped the former Fed governor to be the central bank’s next vice chair for supervision, one of the country’s most powerful banking regulators.
At first, many Republicans said they were skeptical of Raskin’s public remarks calling for federal regulators to flex their administrative powers to pursue policies to curb climate change. Sen. Brown and the White House say Raskin and her views on climate change will be a welcome addition to the Fed and help it study the ways in which climate change impacts financial institutions.
But more recently, the GOP has focused its concern on Raskin’s prior work as a board member at a little-known financial technology company, Reserve Trust. Toomey and his colleagues say Raskin made inappropriate use of her clout as a former Fed governor and Treasury deputy secretary when attempting to secure special access to the central bank on behalf of Reserve Trust in 2017.
They reiterated those worries in a letter sent Biden Thursday morning, in which they again noted that they would be open to a vote to advance the president’s four other nominees: Powell, Lael Brainard, Lisa Cook and Philip Jefferson.
“To be explicitly clear, our actions were aimed solely at Ms. Raskin, as we offered to advance the nomination process for all other nominees scheduled for the markup,” the GOP senators wrote. “Without greater insight into Ms. Raskin’s past activities, we cannot, in good faith, support the advancement of her nomination process.”
That appears to be a non-starter for the Democratic majority, which has thus far insisted that all five nominees be voted on at the same time.