President Biden’s plans to reshape the Federal Reserve were complicated on Tuesday as Republicans delayed a key vote on his five nominees for its Board of Governors.
Republicans did not show up for a committee decision on Tuesday that would have advanced the nominees to the full Senate for a confirmation vote. Because the Senate Banking Committee’s rules require a majority of members to be physically present for such votes, their blockade effectively halted the process.
The unusual maneuver, spearheaded by Senator Patrick J. Toomey of Pennsylvania, was driven by Republican opposition to Mr. Biden’s pick for the top bank cop.
The president has renominated Jerome H. Powell as Fed chair and has tapped Lael Brainard, a current Fed governor, as vice chair. He also has nominated the economists Lisa D. Cook and Philip N. Jefferson as Fed governors. But it is Sarah Bloom Raskin — a longtime Washington policymaker and lawyer whom Mr. Biden has picked as vice chair for bank supervision — who has garnered the most opposition.
In order to prevent her advancement, Republicans held up the vote on all five nominees.
Democrats and the White House decried the Republican boycott while scrambling for a solution that could get the picks through to confirmation. Senator Sherrod Brown, Democrat of Ohio and chair of the Senate Banking Committee, on Tuesday shot down the idea that he would separate Ms. Raskin from the other nominees to allow the rest of the White House’s picks to advance. Ms. Raskin might face tough odds of passing, especially on her own.
By nominating five of the Fed’s seven governors and all of its highest ranking leaders, Mr. Biden had a chance to shake up the institution. While some of his picks — like Mr. Powell — represented continuity, together they would have made up the most racially and gender-diverse Fed leadership team ever.
Sarah Binder, a professor of political science at George Washington University who co-wrote a book on the politics of the Fed, said Democrats would need to come up with a strategy for overcoming the Republicans’ block or the nominees could get stuck in limbo.
“It is really a delay — it might yet scupper Raskin,” she said, noting that Democrats could break the nominations up or could try to garner enough support among the full Senate to override committee rules, though that might be a challenge. “It’s pretty unchartered, and they’re going to have to find a way.”
Tuesday’s maneuver was the latest step in an opposition campaign Mr. Toomey has waged against Ms. Raskin, who would serve as arguably the nation’s most important bank regulator if confirmed.
Mr. Toomey has criticized Ms. Raskin for past comments on climate-related regulation, worrying that she would be too activist in bank oversight. More recently, he has pressed for more information about her interactions with the Fed while she was on the board of a financial technology company that was pushing for a potentially lucrative central bank account.
“Until basic questions have been adequately addressed, I do not think the committee should proceed with a vote on Ms. Raskin,” Mr. Toomey said in the statement.
The White House blasted Mr. Toomey’s move.
“As Chairman Brown has said, some Senate Republicans are playing politics with the American economy by blocking a vote on the chairman of the Federal Reserve and an entire slate of well-qualified nominees,” said Jen Psaki, the White House press secretary, calling Mr. Toomey’s questions about Ms. Raskin’s background “false allegations.”
Mr. Toomey and his colleagues have said that Ms. Raskin, a former Fed and Treasury official, contacted the Federal Reserve Bank of Kansas City on behalf of Reserve Trust, a financial technology company where she served as a board member. Reserve Trust managed to secure a strategically important account at the Fed while she was on its board: To this day, it advertises that it is the only company of its kind with what’s known as a “master” account.
Republicans are blocking the process over concerns about one of the nominees, Sarah Bloom Raskin.Credit…Pool photo by Ken Cedeno
Ms. Raskin had said in written responses to Mr. Toomey’s questions early this month that she did “not recall any communications I made to help Reserve Trust obtain a master account.” But Mr. Toomey said in a subsequent letter that the president of the Kansas City Fed had told his staff that Ms. Raskin had called personally about the account in 2017.
While the Kansas City Fed has insisted that it followed its protocol in granting Reserve Trust’s master account, and nothing Ms. Raskin did was obviously in breach of government rules, Mr. Toomey has continued to push for more information.
“Important questions about Ms. Raskin’s use of the ‘revolving door’ remain unanswered largely because of her repeated disingenuousness with the committee,” Mr. Toomey said in his statement Tuesday.
Mr. Brown said ahead of the vote that he did not know what the next steps would be if Republicans boycotted. During the committee session, as a dozen Republican chairs sat empty and no formal vote was taken, he pledged to reschedule. Democrats did take a vote to show support, but it was not binding.
“Few things we do as senators will do more to help address our country’s economic concerns more than to confirm this slate of nominees, the most diverse and most qualified slate of Fed nominees ever put forward,” he said, chiding Republicans for skipping out.
“They’re taking away probably the most important tool we have — and that’s the Federal Reserve — to combat inflation,” he later added.
The Fed presently has four governors, and Mr. Powell already has been serving as chair on an interim basis, since his leadership term officially expired earlier this month.
In any case, Ms. Raskin may struggle to pass the full Senate. Winning confirmation would require her to maintain full support from all 50 lawmakers who caucus with Democrats and for all those lawmakers to be present unless she can win Republican votes. Senator Ben Ray Luján, Democrat of New Mexico, has been absent as he recovers from a stroke.
“The Republicans are playing hardball because they can,” said Ian Katz, the managing director at Capital Alpha Partners. “At the least, it delays her confirmation. It could have the ultimate effect of killing it.”
