March 02, 2022

Economic Experts to Warren: Raskin Confirmation is Urgent; Fed Vice Chair for Supervision is Key to Preserving Financial Stability

Leading economic and financial stability experts tell Sen. Warren: Fed Vice Chair for Supervision plays a key role in preserving financial stability; leaving position vacant increases risks to the financial system; Committee Republicans’ continued delay of Sarah Bloom Raskin’s confirmation is unjustified and irresponsible.

“Given today’s combination of high inflation, rising interest rates, geopolitical stress, and technological change in the financial sector, delaying the appointment of a Vice Chair puts the American economy in danger.” 

Senator Warren’s Letters to Economic Experts (pdf)

Letter Responses from Economic Experts (pdf)

Washington, D.C. - United States Senator Elizabeth Warren (D-Mass), a member of the Senate Banking, Housing, and Urban Affairs Committee and the Senate Finance Committee released letters from top economic experts on the importance of confirming Professor Sarah Bloom Raskin as Fed Vice Chair for Supervision and the increased risks the vacancy poses to the U.S. financial system.

Professor Sarah Bloom Raskin, a former Federal Reserve Board Governor, Deputy Treasury Secretary, state financial regulator, and a distinguished academic expert, is extraordinarily well qualified for the position.  But Republican members of the Committee boycotted a Committee vote last month to prevent the nomination from moving forward.

“These experts are right. It is critical that Ms. Raskin be confirmed quickly, and the failure to do so leaves the Fed less capable of ensuring financial stability. This is particularly dangerous given the threats to the international economy from the ongoing Russian attacks in Ukraine, and it is outrageous that Republican members of the Committee are preventing the Committee from even voting on her nomination,” said Senator Warren.

To obtain information on the impact of these unjustified delays, Senator Warren wrote to four experts seeking information on the role of the Vice Chair of Supervision: Michael S. Barr, dean of the Gerald R. Ford School of Public Policy at the University of Michigan, and an expert on financial regulation; Simon Johnson Professor of Entrepreneurship at the MIT Sloan School, Greg Feldberg, Director of Research for the Yale Program on Financial Stability at the Yale School of Management, and Adam Posen, President of the Peterson Institute for International Economics.

Their views and findings are significant and reveal the need for quick action on Ms. Raskin’s nomination.  These experts told Sen. Warren that:

  • The financial system currently faces elevated risks.  According to Dr. Posen, “The U.S. economy is at rising financial stability risk right now due to the combination of Russian aggression in Ukraine and the coming increases in interest rates to counter high inflation. These feedback on each other.”  According to  Dr. Johnson, “Today, all the conditions necessary for an elevated financial risk scenario are already in place… The perceived risk of inflation likely intensifies the precariousness of some financial markets. Russia’s invasion of Ukraine increases risks across a wide range of transactions, markets, and assets.”
  • The Vice Chair of Supervision plays a key role in reducing these risks. According to Mr. Feldberg, “The Fed’s Vice Chair for Supervision is singularly positioned to lead the Fed in making adjustments to its supervisory approach.”  Mr. Barr indicated that “The Vice Chair plays a key role in organizing the Federal Reserve’s responses to financial stability risks, and in surveilling the financial system for potential or emerging risks….Without a Vice Chair for Supervision, the Banking Committee’s ability to provide effective oversight of the Federal Reserve’s supervisory responsibilities is severely diminished.”
  • Further delay of Ms. Raskin’s nomination is unjustified and threatens the stability of the financial system and the economy. Posen wrote that “it is reckless and irresponsible for Congress to delay the confirmation of a Vice Chair for Supervision of the Federal Reserve Board. … Given today’s combination of high inflation, rising interest rates, geopolitical stress, and technological change in the financial sector, delaying the appointment of a Vice Chair puts the American economy in danger”  According to Dr. Johnson, “The Vice for Supervision is uniquely positioned to anticipate and help forestall major systemic financial risks. … Leaving this position unfulfilled at the current time is not appropriate, with potentially serious and long-lasting negative consequences.”  Mr. Barr wrote that “it would not be appropriate to delay confirmation of the Vice Chair for Supervision.” And Mr. Feldberg wrote that, “the Vice Chair for Supervision is a critical role and should be filled.”

In February, Senator Warren delivered a floor speech calling out Republicans for holding up President Biden’s slate of Federal Reserve nominees including Professor Sarah Bloom Raskin.

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