Sarah Bloom Raskin’s decision to withdraw from being President Joe Biden’s nominee as the Federal Reserve’s vice chairperson of banking supervision has been attributed to her advocacy of using the central bank’s regulatory powers to enforce climate risks within financial institutions.
Raskin was formerly a member of the Fed's Board of Governors and was a Deputy Secretary of the Treasury in the Obama administration, but the nomination set a precedent because the focus of her candidacy was aimed at her political philosophy regarding the role of financial regulators.
By failing to secure majority support in the Senate — all 50 Republicans plus West Virginia Democrat Joe Manchin opposed her nomination — Raskin’s doomed candidacy might encourage a new consideration of whether the advocacy of climate change solutions is a politically expedient idea.
The Raskin View: Last September, Raskin published an opinion piece in Project Syndicate that questioned why the U.S. couldn't follow the example in other countries of incorporating climate change concerns into their financial regulatory activities.
“While none of its regulatory agencies was specifically designed to mitigate the risks of climate-related events, each has a mandate broad enough to encompass these risks within the scope of the instruments already given to it by Congress,” she wrote. “Accordingly, all U.S. regulators can — and should — be looking at their existing powers and considering how they might be brought to bear on efforts to mitigate climate risk.”
Raskin argued financial regulators should “be encouraged to think more imaginatively about how they can engage with local transition efforts. For example, how might financial policies from diverse agencies be stitched together to produce outcomes that enable firms to hit their net-zero targets? How can financial policy be used to help accelerate a transition that redeploys workers for new jobs, or to assist households that are being asked to change their spending habits? And how can regulatory changes relating to disclosure, access to credit, and pricing of risk support a rapid and just green transition?”
According to a Politico report, Raskin was unapologetic about her views when she alerted President Biden of her decision not to continue with her nomination.
“Their point of contention was my frank public discussion of climate change and the economic costs associated with it,” she wrote in a letter to Biden. “It was — and is — my considered view that the perils of climate change must be added to the list of serious risks that the Federal Reserve considers as it works to ensure the stability and resiliency of our economy and financial system.”
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The Changing Times: Public opinion has, for the most part, been supportive of efforts to raise awareness and acknowledge responsibility for changes to the climate. On Feb. 23, Yale University’s Climate Opinion Maps data found 72% of Americans admitting that global warming is happening, with 65% stating they were worried about this situation and 77% supporting government funding for research into renewable energy solutions and providing tax rebates on solar panels and energy-efficient vehicles.
The day after the Yale study was published, the Russian military invaded Ukraine and this new war brought renewed attention to energy policies around the world. Within the U.S., the Biden administration responded to this crisis — which has included record-high gas prices across the country — with a stronger desire to push the nation away from fossil fuels to green energy. Yet these efforts often seemed to many as tin-eared and indifferent to the abrupt financial chokehold that rising gas prices are having on many Americans.
A joint press conference on March 8 with Vice President Kamala Harris and Transportation Secretary Pete Buttigieg displayed the problem with this approach. Harris waxed enthusiastically about a future with zero-emission freight trucks and Buttigieg called for increased ridership on mass transit and plans to build a $5 billion nationwide network of electric vehicle charging stations. Neither said a word about the ongoing crisis with rising gas prices.
“We can address the climate crisis and grow our economy at the same time,” Harris claimed.
But while Harris and Buttigieg were insisting that we look to the future, Biden was insisting we not look at him regarding today’s energy woes. Prior to the Ukraine war, he blamed rising gas prices on supposedly greedy energy companies gouging the public, but since the war, he’s put the blame on his Russian counterpart.
“The current spike in gas prices is largely the fault of Vladimir Putin,” he said Monday in a speech before the National League of Cities, adding the worst has yet to happen. “Gasoline prices, home heating oil prices are going to continue to go up because of these embargoes on Russian oil and other things that he’s brought on.”
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The Political Football: Earlier this week, 80 Democratic legislators in the House of Representatives sent a letter to Biden demanding he restart the negotiations on his Build Back Better Act, which includes more than $500 billion in climate change investments.
The legislation stalled when West Virginia’s Sen. Manchin refused to support it. Without his backing, it couldn't pass the evenly-divided Senate that would tilt in the Democrats’ favor with Vice President Harris casting a tie-breaking vote.
“Throughout 2021, we bore witness to the devastating impacts of the climate crisis, further illustrating why transformational action cannot wait,” lawmakers wrote in their letter. “Inaction now will mean irreversible consequences for our future generations.”
But will this emphasis on climate change appeal to voters? A Pew Research Center study published on Feb. 16 — eight days before the Russian invasion of Ukraine — found “dealing with climate change” ranked 14th among the top 18 issues on the minds of American voters; socioeconomic issues including strengthening the economy, handling COVID-19 and the quality of education were the key concerns among voters. Among age demographics, 54% of adults under 30 said global climate change should be a top priority while the issue had far less priority among other age groups.
Climate change was not a shared priority among Democrats and Republican respondents to the Pew study: 65% of Democrats insisted climate change was a priority, compared with 11% of Republicans.
Not surprisingly, the partisan divide was magnified in the aftermath of the Raskin withdrawal, with the White House issuing a statement blaming the failure on “baseless attacks from industry and conservative interest groups” while Senate Minority Leader Mitch McConnell (R-KY) said it was “past time the White House admit their mistake and send us someone suitable.”
Benzinga's Take: At the moment, the public doesn't appear to be rallying to Biden’s climate change message — or any of his other messages, for that matter. According to data released this week by the data resource FiveThirtyEight, a division of the Walt Disney Co.’s (NYSE:DIS) ABC News Internet Ventures, Biden has an approval rating of 42.8%; he came into office with a 53% approval rating.
If the failure of the Raskin nomination is any indication, climate change can be used as a tool against political figures rather than as a platform to advance a political agenda. And for those pushing aggressively to make climate change a political and economic priority, it would seem a new strategy is needed when addressing a voting public that's more anxious about current crises and less frantic about what the environment might look like in 50 to 100 years from now.
Photo: Catazul / Pixabay
