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Fed nominees face questions about inflation and climate change

ARI SHAPIRO, HOST:

The Federal Reserve is in the hot seat as it tries to get control over inflation, and some of President Biden's nominees to serve on the Fed's board were on hot seats themselves this morning. We're going to hear about three of the president's picks, two of whom got tough questions today from the Senate Banking Committee.

NPR's Scott Horsley is following this story. Hey, Scott.

SCOTT HORSLEY, BYLINE: Good to be with you, Ari.

SHAPIRO: Let's start with Sarah Bloom Raskin, who got some of the toughest questions this morning from Republicans on the Banking Committee. What is their concern?

HORSLEY: In a word, climate - Raskin is a former Fed board member who also worked in the Treasury Department, and she's been outspoken in saying bank regulators need to incorporate more climate risk in their thinking. The Fed's already doing some of that, but Republican critics worry that Raskin would go further and use her post to discourage banks from lending money to fossil fuel companies.

Senator John Kennedy, who's from Louisiana where oil and gas are big business, pressed Raskin today about an op-ed she wrote in The New York Times a couple of years ago in which she argued against extending one of the Fed's emergency loan programs to oil and gas companies. This was during the first few months of the pandemic.

(SOUNDBITE OF ARCHIVED RECORDING)

JOHN KENNEDY: The world economy is melting down. We're trying to hold it together with baling wire, duct tape, spit and happy thoughts. And you say, that's great, but we ought to let oil and gas companies go broke.

HORSLEY: Now, Raskin says she was only writing there about the Fed's emergency program, not its routine bank supervision.

(SOUNDBITE OF ARCHIVED RECORDING)

SARAH BLOOM RASKIN: The whole point of the op-ed was that the Fed should not pick winners and losers or expose taxpayers to undue risk.

HORSLEY: And Raskin also said repeatedly today that it's up to banks to decide who they lend money to, not the Federal Reserve.

SHAPIRO: Did that reassure her critics?

HORSLEY: I don't think Senate Republicans were won over by her testimony today. Senator Pat Toomey of Pennsylvania sounded skeptical. He described it as a confirmation conversion.

Democrats on the committee, though, defended Raskin and said her thinking on climate change is very much in line with other Fed board members, including Chairman Jerome Powell. Massachusetts Senator Elizabeth Warren argued it would be irresponsible for the Fed not to pay more attention to climate risks.

(SOUNDBITE OF ARCHIVED RECORDING)

ELIZABETH WARREN: Perhaps the real problem here is that Professor Bloom Raskin isn't willing to let Big Oil stand in the way of the Fed doing its job. We're in a climate crisis, and we need regulators with backbone.

HORSLEY: Now, Raskin has already won Senate confirmation twice before for those earlier jobs. But in a 50-50 Senate, this one could be pretty close.

SHAPIRO: And what about the two other nominees?

HORSLEY: Both are African American - part of the president's push to bring some much-needed diversity to the Fed board. Philip Jefferson is a former Fed economist who's now at Davidson College. He looks like he's going to sail to easy confirmation. Not so, though, Lisa Cook, who appears to have something of a target on her back. Some of Cook's academic research has focused on racial inequality, and Republicans argue it's not the Fed's job to address that. Tennessee Republican Bill Hagerty questioned Cook's credentials today, saying her research, quote, "seems more like social science than it does economics and monetary policy." Cook does have a Ph.D. in economics from Berkeley.

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LISA COOK: I certainly am proud of my academic background. I know that I have been the target of anonymous and untrue attacks on my academic record.

HORSLEY: If confirmed, Cook and Jefferson would be 2 of only 5 African Americans to serve on the Fed board in its century-plus history, and Cook would be the first Black woman.

SHAPIRO: That's NPR's Scott Horsley. Thanks a lot.

HORSLEY: You're welcome.

(SOUNDBITE OF JACQUES GREENE'S "CONVEX MIRROR") Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.
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