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NOMINATIONS OF SARAH BLOOM RASKIN, LISA DENELL COOK, AND PHILIP NATHAN JEFFERSON S. HRG. 117–340 NOMINATIONS OF SARAH BLOOM RASKIN, LISA DENELL COOK, AND PHILIP NATHAN JEFFERSON HEARING BEFORE THE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS UNITED STATES SENATE ONE HUNDRED SEVENTEENTH CONGRESS SECOND SESSION ON NOMINATIONS OF: SARAH BLOOM RASKIN, OF MARYLAND, TO BE VICE CHAIRMAN FOR SUPERVISION AND A MEMBER OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM LISA DENELL COOK, OF MICHIGAN, TO BE A MEMBER OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM PHILIP NATHAN JEFFERSON, OF NORTH CAROLINA, TO BE A MEMBER OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM FEBRUARY 3, 2022 Printed for the use of the Committee on Banking, Housing, and Urban Affairs ( S. HRG. 117–340 NOMINATIONS OF SARAH BLOOM RASKIN, LISA DENELL COOK, AND PHILIP NATHAN JEFFERSON HEARING BEFORE THE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS UNITED STATES SENATE ONE HUNDRED SEVENTEENTH CONGRESS SECOND SESSION ON NOMINATIONS OF: SARAH BLOOM RASKIN, OF MARYLAND, TO BE VICE CHAIRMAN FOR SUPERVISION AND A MEMBER OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM LISA DENELL COOK, OF MICHIGAN, TO BE A MEMBER OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM PHILIP NATHAN JEFFERSON, OF NORTH CAROLINA, TO BE A MEMBER OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM FEBRUARY 3, 2022 Printed for the use of the Committee on Banking, Housing, and Urban Affairs ( Available at: https: //www.govinfo.gov / U.S. GOVERNMENT PUBLISHING OFFICE 48–311 PDF WASHINGTON : 2022 COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS SHERROD BROWN, Ohio, Chairman JACK REED, Rhode Island PATRICK J. TOOMEY, Pennsylvania ROBERT MENENDEZ, New Jersey RICHARD C. SHELBY, Alabama JON TESTER, Montana MIKE CRAPO, Idaho MARK R. WARNER, Virginia TIM SCOTT, South Carolina ELIZABETH WARREN, Massachusetts MIKE ROUNDS, South Dakota CHRIS VAN HOLLEN, Maryland THOM TILLIS, North Carolina CATHERINE CORTEZ MASTO, Nevada JOHN KENNEDY, Louisiana TINA SMITH, Minnesota BILL HAGERTY, Tennessee KYRSTEN SINEMA, Arizona CYNTHIA LUMMIS, Wyoming JON OSSOFF, Georgia JERRY MORAN, Kansas RAPHAEL WARNOCK, Georgia KEVIN CRAMER, North Dakota STEVE DAINES, Montana LAURA SWANSON, Staff Director BRAD GRANTZ, Republican Staff Director ELISHA TUKU, Chief Counsel DAN SULLIVAN, Republican Chief Counsel CAMERON RICKER, Chief Clerk SHELVIN SIMMONS, IT Director PAT LALLY, Hearing Clerk (II) C O N T E N T S THURSDAY, FEBRUARY 3, 2022 Page Opening statement of Chairman Brown ................................................................ Prepared statement ................................................................................... Opening statements, comments, or prepared statements of: Senator Toomey ................................................................................................ Prepared statement ................................................................................... 1 47 5 49 NOMINEES Sarah Bloom Raskin, of Maryland, to be Vice Chairman for Supervision and a Member of the Board of Governors of the Federal Reserve System ..... Prepared statement .......................................................................................... Biographical sketch of nominee ....................................................................... Responses to written questions ....................................................................... Lisa DeNell Cook, of Michigan, to be a Member of the Board of Governors of the Federal Reserve System ............................................................................ Prepared statement .......................................................................................... Biographical sketch of nominee ....................................................................... Responses to written questions ....................................................................... Philip Nathan Jefferson, of North Carolina, to be a Member of the Board of Governors of the Federal Reserve System ..................................................... Prepared statement .......................................................................................... Biographical sketch of nominee ....................................................................... Responses to written questions ....................................................................... ADDITIONAL MATERIAL SUPPLIED FOR THE 9 83 84 189 11 112 113 230 RECORD Letters submitted in support of nominees ............................................................. Letters submitted in opposition to nominees ........................................................ (III) 8 50 52 127 261 344 NOMINATIONS OF SARAH BLOOM RASKIN, LISA DENELL COOK, AND PHILIP NATHAN JEFFERSON THURSDAY, FEBRUARY 3, 2022 U.S. SENATE, URBAN AFFAIRS, Washington, DC. The Committee met at 8:45 a.m., via Webex and in room 106, Dirksen Senate Office Building, Hon. Sherrod Brown, Chairman of the Committee, presiding. COMMITTEE ON BANKING, HOUSING, AND OPENING STATEMENT OF CHAIRMAN SHERROD BROWN Chairman BROWN. The Senate Committee on Banking, Housing, and Urban Affairs will come to order. Welcome to our three nominees and their family members and guests. The nominees will have an opportunity to introduce anyone they would like to. Today’s hearing is in the hybrid format. Witnesses are in person. Members have, of course, the option to appear either in person or virtually. The Committee is meeting to consider the nominations of three very, very qualified nominees. In fact, these nominees have the support of people who have contacted this Committee, 1,000 individuals and organizations have weighed in support. I have never seen a number like that. Not so long ago we had 100 people weigh in and we thought that was pretty overwhelming. This is 10 times 100, if my math is correct. The Honorable Sarah Bloom Raskin is nominated by the President of the United States to be Vice Chair of Supervision, a Member of the Board of Governors of the Federal Reserve System. Dr. Lisa Cook has been nominated by the President to be a Member of the Board of Governors of the Federal Reserve. Dr. Philip Jefferson also to be a member, nominated by the President of the United States, to the Board of Governors of the Federal Reserve. In the first year of the Biden–Harris administration we have seen tremendous economic progress: record job growth, rising wages, the fastest economic growth in 40 years. Last year—and think about this—last year, for the first time in two decades, our economy grew faster than China’s. That is worth saying again, considering what this body did, in listening to corporate interests outsource jobs to China for a generation, especially since 1999 to 2000, that our economy during the first year of the Biden administration grew faster than China’s economy. (1) 2 Because of the action we took with the American Rescue plan and because of this President’s commitment to American workers— he puts workers at the center of our economy and our economic policy—we are making historic economic progress, exceeding expectations of anybody, even the most partisan. We are at a pivotal moment in our recovery. The Omicron variant has caused COVID cases to increase in the last 8 weeks, further straining our supply chains. These pandemic-related problems are causing higher prices that eat away at Americans’ paychecks. Your job, as three future members of the Fed—and I do think you will be confirmed—your jobs as three future members of the Fed is to deal with that inflation. The Black unemployment rate is more than twice that of White workers. Women are slowly reentering the paid labor force, after too many were forced to leave at the height of the pandemic. As Fed Chair Powell said, ‘‘Getting past the pandemic is the single most important thing we can do.’’ Chair Powell is right. The actions we take over the next several months will determine whether we have a truly robust recovery, with lower prices, higher wages and plentiful job opportunities distributed so everyone has opportunities, whether we have that kind of truly robust recovery, or whether our economy falters, and Americans are denied the opportunity to emerge from this pandemic stronger than before. That is the fork in the road, and that brings us to today. We must have a fully functioning Federal Reserve Board—all seven members—ready to meet these challenges, ready to ensure our economy continues to prosper. It has been almost a decade since the Federal Reserve Board, the seven members, that we have had seven Board members. That is what makes this hearing urgent. That is what makes the importance of a vote on February 15th so important. Governor Bloom Raskin, Dr. Cook, and Dr. Jefferson are the proven leaders we need at this critical moment. These three experienced public servants understand the importance of empowering workers through full employment and the need to combat inflation so paychecks go farther. They are dedicated to Fed independence. I know that. They will uphold the Fed’s dual mandate—I know that—a mandate to ensure that all Americans have job opportunities at good wages, and to ensure that wage gains are not eroded away by exorbitant prices. They know that when we keep our financial system safe, and when we support working families and Main Street businesses by putting workers at the center of economy, then our entire economy grows. When we all do better, we all do better. Sarah Bloom Raskin is the President’s nominee to serve as the Federal Reserve’s Vice Chair for Supervision. I have not seen a nominee for a job like this close to being as qualified as Dr. Raskin. She was the Maryland State Bank Commissioner, she was a Federal Reserve Governor, and she was Deputy Treasury Secretary, the number two position at perhaps the most important agency in the Federal Government. No one is better equipped than Ms. Raskin to protect Americans from risks that could bring down financial markets and institutions 3 and wreck people’s savings, from cybersecurity threats to climate financial risk. Throughout her distinguished career, Ms. Raskin has worked with the smallest community banks and the largest multinational financial institutions. She has worked with consumers, community groups, and businesses small and large to keep our financial system safe. Unfortunately, regrettably, we have seen a coordinated effort by some to paint her as some sort of radical. That characterization requires a suspension of common sense. For her past confirmations she has had the support of every Republican on this Committee, every Republican on the Finance Committee. In fact, the entire Senate twice confirmed her—twice unanimously. Think about that. Sarah Bloom Raskin has been nominated to key economic posts twice before. Both times, every single Senator, Republican and Democrat, supported her nomination. Now they are accusing her of some radical kinds of thoughts that do not have weight. As Deputy Secretary of Treasury, Ms. Bloom Raskin led the Obama administration’s effort on cybersecurity resilience for the financial sector, a critical issue that requires vigilance to protect our economy and national security. She understands that we need to think about all the financial risks our economy faces, including the possible economic impact of severe weather and climate change. As we heard from Chair Powell about the issues of climate, this is a priority for him and for the Fed. Looking at all the risks posed to our financial system is not a partisan issue; just ask Chair Powell. It is not some radical idea; just ask Citi and Morgan Stanley. We saw in 2008 what happens to people’s job opportunities and to their livelihoods, their home, their retirement accounts, their college saving, when we ignore big risks, and we know that people that pay the highest price for that risk are people of color and women. Sarah Bloom Raskin will work to make sure our country does not repeat that same mistake. Dr. Lisa Cook and Dr. Philip Jefferson are the President’s nominees to serve as Governors. They are highly respected and they are experienced economists with sterling credentials. They understand how monetary policy can contribute to our economic growth and strengthen our economy for everyone. Dr. Cook currently serves as Professor of Economics and International Relations at Michigan State University. She brings a wealth of research and international experience on monetary policy, banking, and financial crises. That includes serving on the Council of Economic Advisers during the Eurozone crisis and past work with several Federal Reserve banks. She has done groundbreaking research on how disparities in our economy inhibit technological innovation and limit our overall economic growth. She knows the important role that workers and local communities play in our overall economic growth, from the rural South, where she was raised, to the industrial Midwest, where she now works. She has led the American Economic Association Sum- 4 mer Training Program, which builds the pipeline for diverse young economists to ascend to institutions like the Fed. A graduate of Spelman, a school in Oxford, and Berkeley Ph.D., she is very qualified for this job. To give you a sense of her impact, a mayor from my home State, Mayor Babcock of Oak Harbor, in northern Ohio, wrote to me about her. He got to know Dr. Cook at one of those training programs, and he wrote, ‘‘I know her to be kind, qualified, and to understand the struggles and opportunities faced by Midwest communities like mine, where we are burying the term ‘Rust Belt’ in pursuit of a bright future.’’ Burying the term ‘‘Rust Belt.’’ We need a whole lot more people in institutions like the Fed who understand how ignorant that term is, and misleading, and who understand that economic growth only matters if it reaches people like in Oak Harbor, Ohio. Dr. Lisa Cook will be that public servant. Dr. Jefferson is the Vice President for Academic Affairs, Dean of Faculty, and Paul B. Freeland Professor of Economics at Davidson College. He began his career as a Fed economist. He grew up in the shadow, as he told me on the phone, of RFK Stadium in Washington. He served as chair of the Economics Department at Swarthmore College in Swarthmore, Pennsylvania. Dr. Jefferson literally wrote the book on poverty and economics. His research on poverty will bring a perspective to the Fed that we need as we emerge from the coronavirus crisis. Will you look at the diversity, not just who is sitting at this table, and we have never had a table of people sitting at the Fed like you. But think of the difference in perspective and attitude and upbringing and beliefs and emphasis and how that is going to serve all of us in this country. Listen to what the Washington Post Editorial Board wrote. Sometimes the board leans conservative. Think privatization of Medicare—the Washington Post thought that was a great idea—the Iraq War—the Washington Post really thought that was a great idea— trade deals that outsource jobs—the Washington Post always thought that was a good idea. So sometimes the Washington Post board leans conservative, and sometimes they lean more progressive. But we all agree it is hardly a bastion of radical left-wing thought. Listen to what they wrote about these nominees: President Biden’s latest nominees to the Federal Reserve, quote, ‘‘are ready to help lead the Fed and bolster its credibility. The Senate should move quickly to put them in place.’’ And early in my remarks I mentioned the 1,000 individuals and organizations that support the three of you for the Fed. For the first time in almost a decade we will have a full Board of Governors at the Fed, one that reflects the country. We will have public servants who will not only steer us back on to the road to normalcy, but who will reach for a stronger economy than before. The American people deserve a Fed that works for them. Our country codified the Fed’s dual mandate of price stability and full employment with the 1978 Full Employment and Balanced Growth Act—we know it as the Humphrey Hawkins bill—and borne out of the Civil Rights Movement. For a decade, civil rights advocates 5 worked for something like Humphrey Hawkins. The law makes it clear that, quote, ‘‘Increasing job opportunities and full employment would greatly contribute to the elimination of discrimination based upon sex, age, race, color, religion, national origin, handicap, or other improper factors.’’ This is part of the Fed’s job. President Biden’s Fed nominees will ensure all workers that their families reap the benefits of the economic growth they create. These nominees will fight for the communities that have been left on their own far too often in this country, women and Black and Brown workers, to rural towns, to all the places derisively called the ‘‘Rust Belt.’’ I look forward to supporting these three nominees, and I and encourage all of my colleagues to do so as well. Ranking Member Toomey. OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY Senator TOOMEY. Thank you, Mr. Chairman. Ms. Raskin, Professor Cook, and Professor Jefferson, welcome and thank you for your willingness to serve. We are here today, obviously, to consider three Fed nominees. But today’s hearing is not just about vetting them. It is really a referendum on the Fed’s independence and whether or not we are going to abandon a core part of our democracy. There are people on the left, including in the Biden administration, who are advocating that the Fed use its supervisory powers to resolve complex political issues, like what to do about global warming, social justice, and even education policy. These are certainly important issues, but they are wholly unrelated to the Fed’s limited statutory mandates and expertise. More importantly, addressing those kinds of issues necessarily requires political decisions involving tradeoffs. In a democratic society, those tradeoffs must be made by elected representatives who are accountable to the American people, not unelected central bankers. The question is not about the merits of specific policies, but rather who should decide if they should be put into place. Let us take global warming. If we further limit domestic oil and gas production, energy prices will rise. Americans will pay even more at the pump to accomplish the stated goal of decreasing emissions. How much more should they have to pay? If we move aggressively to limit energy production but other countries do not, global warming probably will not significantly slow. Should we do it anyway? How much reduction in global warming should we get for the pain we would put the American people through? Let me be clear. This is not about whether one believes that addressing global warming is important, or how you would answer either of those or any other questions that are related. The point is these are difficult choices which must be made by accountable representatives through a transparent and deliberative legislative process. That is how a democratic republic works. My concern about Fed overreach is not hypothetical. The Fed is already exceeding its mandates and engaging in political advocacy. For example, the Minneapolis Fed is actively lobbying to change 6 Minnesota’s constitution on the issue of K–12 education policy. Now does anyone truly think such activity is within the Fed’s mandate? If activism by a supposedly independent central bank is accepted, then potentials for abuse, by both parties, is limitless. And do not just take my word about the politicization of the Fed. Let us consider what Ms. Raskin has said the Fed should do. She has repeatedly, publicly, and forcefully advocated for using financial regulation, including the Fed, to allocate capital and to debank energy companies. Now most other like-minded regulators have been careful to say their goal is simply to assess risk, but Ms. Raskin has said the quiet part out loud. In a 2020 report from a progressive organization, Ms. Raskin urged financial regulators to adopt policies that will, and I quote, ‘‘allocate capital,’’ end quote, away from energy companies. In a 2021 speech at the ‘‘Green Swan’’ conference, she proposed, and I quote, ‘‘portfolio limits or concentration limits,’’ end quote, on banks’ lending to energy companies. And, in May 2020, at the height of the pandemic, she specifically called, in a New York Times op-ed that she wrote, for excluding a single industry, the fossil energy sector, which she called, and I quote, ‘‘a dying industry,’’ end quote, excluding them from the Fed’s emergency lending facilities. Ms. Raskin’s proposals would have devastating consequences not just for energy workers, of which we have millions, but also consumers, who would have to pay much more for energy. Now on what basis could she justify this idea that the Fed exercise should these extraordinary powers? Well, I think Ms. Raskin sees two categories of climate-related financial risks. The first is physical and the second is transition. Now the actual data is very clear. It shows that ‘‘physical risks,’’ that is, the result of severe weather events, do not threaten financial stability. Economic damage from weather-related events in America, as a percentage of GDP, has actually trended down over the last 30 years—that is just a fact—and we still have not found a single bank failure caused by any weather event. So it is pretty clear that banks are perfectly capable of managing the physical risk. But we are also told that banks need regulation that quantifies the ‘‘transition risk’’ from changing consumer preferences. Well, let me tell you, bankers know how to manage changing consumer preferences better than regulators do. Let us be honest. The real risk here is political, as Fed Chair Powell acknowledged last month. The real risk is unelected officials like Ms. Raskin who want to misuse banking regulatory powers to impose environmental policies that Congress has refused to enact. Ms. Raskin has repeatedly and specifically advocated that the Fed allocate capital away from the fossil fuel industry as a way to combat climate change. She says the quiet part out loud. Now turning to Professor Cook, the Administration cites her role as a director of the Chicago Fed as a main qualification. That is a position she has held for 2 weeks prior to being nominated. She has a Ph.D., but no academic work in monetary economics. And the few times that she has said anything about monetary policy, it has been a cause for concern. 7 Despite unemployment below 4 percent and inflation above 7 percent and real wages for workers declining, in my conversation on Tuesday with Professor Cook she refused to endorse the path that the Fed has decided to take finally to pull back somewhat on its easy money policy. The fact is, keeping monetary policy loose is going to continue to accelerate inflation that is rising faster than wages already. High inflation is a tax that makes everyone poorer, but especially low-income workers. I think it is also important to note Professor Cook’s extreme leftwing political advocacy. She has publicly supported race-based reparations, promoted conspiracies about Georgia voter laws, and sought to cancel those who disagree with her views, including publicly calling for the firing of an economist who dared to tweet that he opposed defunding the Chicago police. And after we highlighted these tweets for the public’s attention, yesterday Professor Cook blocked the Banking Committee Republican Twitter account. Apparently Professor Cook realizes how inflammatory her partisan tweets have been. See, the Fed is already suffering from a credibility problem because of its involvement in politics and its departure from its statutorily limited and proscribed role. I am concerned that Professor Cook will further politicize an institution that has to remain apolitical. Finally, Professor Jefferson, thank you for coming to my office and for the conversation that we had on Tuesday. I enjoyed and appreciated our discussion, and I admire your decades of work on macroeconomic issues, very much including monetary policies and issues that are central to the Fed’s important work. Based on Professor Jefferson’s academic credentials, his written work, and my meeting with him, I think Professor Jefferson is well-suited to the position for which he has been nominated. Let me conclude by addressing my Democratic colleagues. You folks have spent the last several months talking about how passionately dedicated you are to democratic principles and values, and I do not doubt that you have been sincere about that. But certainly one of those principles is that the unelected Governors of America’s central bank should not be responsible for dealing with difficult issues like global warming, social justice, and education policy. This is not about the importance of those issues. It is about keeping the Fed apolitical and independent and ensuring that elected, accountable representatives make difficult the decisions. If that does not convince you, I would urge you to remember that one day the shoe will be on the other foot. Thank you. Chairman BROWN. Thank you, Senator Toomey. Would the three witnesses rise, please, and raise your right hand. Do you swear or affirm that the testimony you are about to give is the truth, the whole truth, and nothing but the truth, so help you God? Ms. RASKIN. I do. Ms. COOK. I do. Mr. JEFFERSON. I do. 8 Chairman BROWN. Do you agree to appear and testify in front of any duly constituted committee of the Senate? Ms. RASKIN. I do. Ms. COOK. I do. Mr. JEFFERSON. I do. Chairman BROWN. Thank you. Please be seated. Again, we welcome the three of you to the Committee. If you would like to introduce family members or friends with you today I invite you to do that at the beginning or during your testimony. Ms. Bloom Raskin, please begin your testimony. Thank you for joining us. STATEMENT OF SARAH BLOOM RASKIN, OF MARYLAND, TO BE VICE CHAIRMAN FOR SUPERVISION AND A MEMBER OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Ms. RASKIN. Well thank you, Chairman Brown, Ranking Member Toomey, and Members of the Committee for the opportunity to appear before you today. Thank you also to your exemplary staff, who provide essential support, something I know from serving this Committee as Banking Counsel. With me today is our daughter, Hannah Grace Raskin. There she is. Hannah is a real live banker, and we have animated conversations about banker-like topics such as what goes into the numerator for the Allowances for Loan Loss Reserves and what gets subtracted out of Net Interest Margins. Our other daughter, Tabitha, teaches middle school algebra. She would have been here but for the fact that today is the review day before the exam for slope and intercept equations. Our son Tommy, who we lost in 2020, is with me always. He came into the world when I worked for this Committee. I remember where I was standing, actually, in these very offices in 1995, when he started kicking as I went into labor, and I remember returning to these halls to show my friends here my sparkling little boy. Boundless gratitude too to my beloved husband, Jamie, who provides bedrock strength and love to our family. As a child growing up in Illinois, my family made a weekly Saturday morning pilgrimage to the Bank of Homewood, where my mother would withdraw money for the week. From this experience, the importance of banks to the economic well-being of a community was never lost on me. As my brother and I eyed donuts in the lobby, my mom would direct us to get in line for the right bank teller: ‘‘This line,’’ she would say, ‘‘We want Shirley.’’ We would get weekly updates on Shirley’s children, their Little League games, bowling scores, and family camping trips. In 2007, I was honored to become Maryland’s State banking commissioner, which enabled me to demonstrate my lifelong appreciation for community banking. Later, I was confirmed by the Senate to be a Governor on the Federal Reserve Board from 2010 to 2014, and Deputy Treasury Secretary from 2014 to 2017. I also worked in the private sector as a banking lawyer and general counsel. I am proud of my work at the Federal and State levels to champion the interests of consumers and community banks, while ensuring the resilience of our financial system, particularly in the areas of cybersecurity and appropriately tailored rules. These experiences 9 helped me understand the importance of bank supervision to the ability of our financial system to work for all Americans. I also learned from the subprime mortgage crisis, which cost us tens of millions of jobs and homes, and trillions of dollars lost to our families, businesses, and communities in equity and savings. Like the crises before it, the subprime mortgage crisis showed how weak regulatory oversight and unattended problems can reverberate, rattle, and ravage our entire economy. I learned that to be effective for all Americans bank supervisors must make sure that the safety of banks and the resilience of our financial system are never compromised in favor of short-term political agendas or special interest groups. They must stay attentive to risks no matter where they come from: inside or outside the financial sector, well-identified asset bubbles or speculation, a set of threat actors that launch cyberattacks, or from nature and cataclysmic weather-related events. As created by Congress, the role of Vice Chair of Supervision requires consultation with other Governors of the Federal Reserve, the Fed’s expert staff, the banks themselves, and other experts about the extent to which financial institutions are identifying, analyzing, and managing their risks. The role does not involve directing banks to make loans only to specific sectors, or to avoid making loans to particular sectors. And the role exists within the laws passed by Congress that govern the Federal Reserve and its responsibilities. I understand that anyone confirmed to this position must act not only with as much knowledge as possible but also with humility. Knowledge, especially about the future, can be imperfect. Finally, I also want to recognize the toll inflation exacts on working people who are concerned about how far their paychecks will go for essentials like food, housing, and transportation. It is an important task of the Federal Reserve to reduce inflation and one that must be a top priority while we continue to sustain our economic growth. If confirmed, I commit to pursue this work with the highest ethical standards. I look forward to meeting the considerable challenges and opportunities before us: the indispensable work of defending and safeguarding the financial sector, the Federal Reserve’s dual mandate, and the economic future of all Americans. Thank you. Chairman BROWN. Thank you, Ms. Raskin. Dr. Cook, you are recognized to begin your testimony. Thank you. STATEMENT OF LISA DENELL COOK, OF MICHIGAN, TO BE A MEMBER OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Ms. COOK. Senator Brown, Ranking Member Toomey, and other Members of the Committee, thank you very much for the opportunity to appear before you today. I am humbled and honored to have been nominated by President Biden to be a member of the Board of Governors of the Federal Reserve System. I earned my Ph.D. at Berkeley, served on the President’s Council of Economic Advisers, and have spent decades teaching, studying, and researching economic growth and monetary policies. The depth 10 and breadth of my experience in both the public and private sectors qualify me to serve as a Federal Reserve Governor, and should I be confirmed I would be honored to work with my colleagues to help navigate this critical moment for our nation’s economy and the global economy. In terms of priorities, I agree with Chair Powell that our most important task is tackling inflation. High inflation is a grave threat to a long, sustained expansion, which we know raises the standard of living for all Americans and leads to broad-based, shared prosperity. That is why I am committed to keeping inflation expectations well anchored. My approach to complex problems is to be guided by facts, data, and analysis and to work collaboratively. I have served in the Administrations of Presidents from both parties, and when I make decisions, I do so based on the facts and not politics. In this respect, I will follow the example of Paul Volcker, whom I greatly admire for his unwavering dedication to a nonpolitical and independent Federal Reserve. My convictions are shaped by my upbringing in Milledgeville, Georgia. It was the desegregating South, and both sides of my family were promoting nonviolent change alongside our family friend, the Rev. Dr. Martin Luther King, Jr. While my sisters, Pamela and Melanie, and I were integrating our schools and pools, my parents were integrating their places of work. My mother, Professor Mary Murray Cook, and my aunt, Professor Loretta Murray Braxton, integrated their universities and STEM departments by gender and by race, preparing students for a desegregating South that promised greater opportunity for all. My cousin Floyd McKissick, Sr., spoke at the March on Washington and integrated the University of North Carolina law school. My uncle, Dr. Samuel DuBois Cook, studied with Dr. King at Morehouse College, was the first African-American tenured professor at a southern university, and later was president of Dillard University. I want to thank Senators Warren, Kennedy, and Tillis, as well as the many other Senators who honored my uncle in a Senate resolution upon his death in 2017. The sense of discipline, hope, and mission instilled in me by my family has taken me from Spelman College to Oxford University, the Hoover Institution, and Harvard, but I have never forgotten where I came from and the dedicated teachers who supported me. I chose to seek my current tenured position as a macroeconomist in the industrial Midwest in this same spirit of being close to how our economic decisions affect working families. Living in a manufacturing hub during the financial crisis has underscored the effect that deep recessions have on everyday lives, and that is one reason I have dedicated much of my career to preventing the next financial crisis. A strong and resilient financial system supports American families, businesses, and our economy. My research on economic growth has been informed by my interactions with families, businesses, policymakers, and financial institutions. I have extensive experience working for many types of banks, including serving on the board of a CDFI in Grand Rapids, Michigan. I am particularly proud that community banks were among those who elected me to serve on the board of the Federal 11 Home Loan Bank of Indianapolis. I have also worked closely with the Federal Reserve over the course of my career, conducting research at Reserve Banks before and after receiving my doctorate, attending policy conferences, and serving on advisory panels and as a director of the Federal Reserve Bank of Chicago. There is still much to learn to make sure the Fed does its job even better. Our economy is constantly evolving. Learning to do better will require humility, perseverance, and diverse perspectives. Again, it is an honor to be considered for this position, and I look forward to working with Members of this Committee. If confirmed, I will faithfully support the congressionally mandated goals of stable prices and maximum employment, which Congress has entrusted to the Federal Reserve. Thank you. And I would like to thank my aunt, Wivona Ward from Virginia Beach, Virginia, and my sisters, Pamela Cook and Melanie Cook McCant, for escorting me here today. Chairman BROWN. Thank you, Dr. Cook. Dr. Jefferson, you are now recognized to begin your testimony. STATEMENT OF PHILIP NATHAN JEFFERSON, OF NORTH CAROLINA, TO BE A MEMBER OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Mr. JEFFERSON. Chairman Brown, Ranking Member Toomey, and Members of the Committee, thank you for the opportunity to appear before you today. I am honored to have been nominated by President Biden to serve as a member of the Board of Governors of the Federal Reserve System. If confirmed, I would draw upon my background and skill set to contribute positively to the well-being of the American people by helping the Federal Reserve to adhere to the dual mandate set for it by Congress—promotion of maximum employment and stable prices. As some of you may know, I was born and raised here in Washington, DC, in the Northeast section, just blocks away from Robert F. Kennedy stadium. The neighborhood is called Kingman Park, and in my youth it was a place where the line between a future of success and struggle was thin. The Capitol is a mere 25 blocks from the row house where I grew up. My first job after graduating from college was here in Washington, DC, as a research assistant for the Board of Governors. Since that time, I have been fortunate to pursue a career that spanned a valuable combination of experiences both within and outside academia. I have served as a professor of economics, department chair, college dean, college vice president, president and director of various professional organizations focused on economics, a college trustee, a borough council member, and have held additional professional roles within the Federal Reserve System. In the leadership positions I have held, the essential qualities for success have included a spirit of collaboration, the capacity to compromise, and the ability to achieve consensus. Further, I am a Ph.D. economist with an unusual combination of specializations: macroeconomics and monetary economics, poverty and economic inequality, and applied econometrics. If confirmed, these specializa- 12 tions would enable me to analyze from multiple perspectives the complex issues that come before the Board. Today, the economy is facing two major challenges: the COVID– 19 pandemic and inflation. The pandemic has disrupted the supply side of the economy and changed the composition of aggregate demand. The spike in inflation we are seeing today threatens heightened expectations of future inflation. The Federal Reserve must remain attentive to this risk and ensure that inflation declines to levels consistent with its goals. The mandates set by Congress for the Federal Reserve have served the American people well. As we know from experience, the pursuit of maximum employment and stable prices fosters an economic environment characterized by a dynamic labor market, entrepreneurship, private saving and investment, and sustainable growth in consumption and production over the longer run. Importantly, the dual mandate provides a critical foundation for monetary policy amid our current challenges and those that lie ahead. The tools of monetary policy can be deployed with clear goals in mind. Adherence to these goals will ground inflation expectations appropriately so that policy itself does not encumber private economic decision making. Further, long-run inclusive prosperity requires that the Federal Reserve pay careful attention to the safety and soundness of banks and the stability of the financial system. Before closing, I wish to acknowledge the love and support of friends and family, especially my sons, Nathan, who is watching remotely, and Miles, who happens to be right here with me. Also, I wish to mention my late parents, Wade Jefferson, and Joan and Walter Coates, who worked so hard and gave so much, so that this improbable day might even be possible. Regardless of the outcome, they would have been so very proud of these proceedings. Thank you for the opportunity to appear before you today. It is a real honor. I look forward to and welcome your questions. Chairman BROWN. Thank you, Dr. Jefferson. Governor Raskin, I will start with you. Many of us are familiar with your work at Treasury on cybersecurity, applauded by the financial industry to keep the Government agencies and industry connected with up-to-date information on cyberthreats to the financial sector. You know first-hand how important it is to protect working Americans from risks in our financial sector, financial system, and that is the job of the Vice Chair for Supervision. If confirmed, how would you approach evaluating all the risks to our financial system? Ms. RASKIN. Well, Chairman Brown, thank you for that question. Banking regulators are centrally concerned with the management of risk in the banking system, which we know, over the course of American history, has been subject to numerous shocks and crises. So whatever the risk, whether we are talking about the risks of cyberattacks, whether we are talking about the risks that come from climate-related extreme weather events, the job of the banking regulators is to make sure that the banking system has appropriately accounted for these risks and is prepared to mitigate them. Now, the watch word here is resiliency, resiliency in the face of potential risk. So I know there has been a lot of speculation about this. I want everyone to understand three basic principles that de- 13 fine my approach to the Federal Reserve’s regulatory and supervision of risk. OK. So first, it is inappropriate for the Fed to make credit decisions and allocations. Banks choose their borrowers, not the Fed. It is inappropriate for the Fed to choose winners and losers. Doing so is not the proper institutional role of the Fed. That is a cardinal principle of Fed supervision. Second, regulation is best achieved when it is collaborative. My practice is to bring all interested parties and experts to the table and to listen carefully before making consequential regulatory decisions. This approach has been my hallmark since my time as the Maryland Commissioner of Financial Regulation and it has been the crux of my effectiveness as a regulator. Third, supervisory and regulatory actions must always stay within the bounds of the law. They must stay within the bounds of the Fed’s authority as Congress has set forth. All actions have to stay within the Fed’s statutory mandates. I understand Congress’ strictures and authorities and have always acted within them. So in my 4 years as a Fed Governor, as my years as a Maryland Commissioner of Financial Regulation, as my years as Deputy Secretary of the Treasury, I have never deviated from these three principles guiding our regulatory and supervisory processes, and I cannot think, really, of a single moment when anyone would accuse me of having deviated from them. Again, I know them. I understand them. I understand the role. I understand the law. Chairman BROWN. Thank you. Thank you, Governor. Dr. Cook, you grew up in a small town in Georgia, not far from where my mom grew up. You teach in the industrial Midwest, not far from really where I live. You have served as an economist in administrations, Democrat and Republican alike. How has that shaped your view of monetary policy, and as you answer that, tell us how the Fed can create conditions for investment in good local jobs? Ms. COOK. Thank you for that question, Senator. Growing up in rural Georgia and being an economist in the industrial Midwest have both shaped the way I think about the dual mandate, maximum employment and stable prices. One of the most shocking events of my career has been to teach macro in fall 2008, and sit in my office and look outside and see a long line. Where is that long line from? I had no idea. I asked a colleague, and the colleague told me that there was a food pantry, and this long line that looked like it was straight out of the Great Depression, straight out of the Dorothea Lange portfolio, was our students. Their parents had lost their jobs. They had lost their jobs. They should be studying. At that time I decided that all of the skills that I have, the ones that I have acquired, the ones that I have acquired through experience, through research, would be devoted to addressing eliminating risk associated with financial and economic crises. So that is what shapes my view with respect to monetary policy. Where does that experience come from? That experience comes from sitting on the board of a CDFI. It comes from sitting on the board of directors of the Federal Reserve Bank of Chicago. It comes 14 from interacting with firms and businesses and everyday people throughout the Midwest. So I am keenly aware of the challenges that everyday Americans face, and I am keenly aware of the types of capital, for example, that do not flow to those places easily. So my work on the Federal Home Loan Bank of Indianapolis, has been really important in trying to get capital to capital-scarce places and to capital-scarce sectors. So that is what shapes my views on monetary policy. Chairman BROWN. Thank you. Thank you, Dr. Cook. Dr. Jefferson, we all know the pandemic’s devastating impact on our country, especially on low-income workers and families who are already struggling. As a former Fed economist who has written extensively on the economics of poverty and inequality, discuss how the Fed can minimize the pandemic’s lasting impact on low-wage workers. Mr. JEFFERSON. Thank you. Thank you for that question, Senator. The way in which the Fed, within its authorities, can best improve the recovery from the pandemic for low-wage workers is to stick to its dual mandate, which is to keep a focus on maximum employment and stable prices. Because, Senator, what we learned from the long expansion that we were enjoying before the pandemic is that over the long run noninflationary growth is itself very inclusive. It allows people from all parts of the wage distribution to participate in our economy. So what the Fed can do is create the macroeconomic conditions for long-run noninflationary growth. Chairman BROWN. Thank you. Senator Toomey, you are recognized. Senator TOOMEY. Thank you, Mr. Chairman. Let me start with Professor Jefferson. Thanks for coming by my office and for our discussion recently. During the course of our conversation you said to me, I think this is pretty close to a verbatim quote, that ‘‘the Fed Board has no role in the allocation of capital,’’ period, end quote. So just for the record here this morning, is that a fair characterization of your view? Mr. JEFFERSON. I stand by that quote, Senator. Senator TOOMEY. OK. Thank you. Ms. Raskin, I have heard what you have said this morning. I saw your testimony. But from your repeated speeches, op-eds, podcasts, all kinds of sources, right up to very recent times, it seems very clear to me that you believe that climate change is a very, very dire, imminent threat, that it will be catastrophic, I think you have used the word ‘‘existential,’’ and that for those reasons it is necessary and appropriate for financial regulators, including the Fed, to allocate capital away from those companies that are contributing the most to the carbon in the atmosphere. Isn’t that true? Ms. RASKIN. Thank you, Senator Toomey. It is inappropriate for the Fed to make credit decisions and allocations based on choosing winners and losers. Banks choose their borrowers. The Fed does not. It is inappropriate for the Fed to choose winners and losers, and to do so is not the proper institutional role of the Fed. That is, as I said, a cardinal principle of Fed supervision. Senator TOOMEY. OK. I hear you say this, but the problem is the huge, documented weight where you have said something very, 15 very different. In the Financial Times, in January of 2021, you wrote an op-ed. In that you said, and I quote, ‘‘Next, the financial supervisors will need to know how to act on this information. Supervisory adjustments will have to take climate disclosures into account, and the Fed will need to use climate risk data to make decisions on asset purchases,’’ end quote. At UC Berkeley, at a forum speech that you gave in April of 2021, you said, and I quote, ‘‘I have come to a singular recognition and it is this: In order to maximize the speed and safety of a move into a sustainable, durable, net-zero economy and away from climate change disaster, we need to use the financial regulatory apparatus to engage financial markets and financial institution in effecting both direction and pace,’’ end quote. In June of 2020, the Ceres report came out, and you wrote, and I quote, ‘‘At the very least we must rebuild with an economy where the values of sustainability are explicitly embedded in market valuation. This transformation will come, in part, from urging the leaders of our financial regulatory bodies to do all they can, which turns out to be a lot, to bring about the adoption of practices and policies that will allocate capital and align portfolios toward sustainable investments that do not depend on carbon and fossil fuels,’’ end quote. How is that not advocating that regulators pressure the financial institutions to allocate capital the way the regulators want? Ms. RASKIN. Well, it is, of course, not the role of the Fed to be directing credit allocation. They do not choose winners and losers. The way supervision works is by looking at risk, and by looking at risk wherever it may arise. You look at that risk, and you have to do it in a very honest way, and ask yourself whether there is any correlation between that risk and the ability to hurt a financial institution. Senator TOOMEY. Are you saying you no longer hold these views that you stated about allocating capital as a result of your perception of this risk? Ms. RASKIN. My views have been consistent, Senator. The Fed should not pick winners and losers. They should not be exposing taxpayers to undue risk. Senator TOOMEY. Well, OK—I am sorry. There is no reasonable reading of these articles and speeches that can come to a conclusion other than that you want to be allocating capital away from those industries that are generating large amounts of CO2. I am sorry. I know you are saying something different here this morning, but that is not what you have been saying in writing for several years now. Let me move over to Professor Cook. I have heard you talk about the importance of getting inflation under control, but we had a phone conversation a couple of days ago. In that conversation I specifically asked you whether you agreed with and supported the Fed’s recent decision to gradually begin the process of removing the ultra-easy money policy or whether you thought they were acting prematurely. And what you said was, well, somewhere in between. So I am wondering if you can clarify that. Well, let me ask a simple question. Do you now support the Fed’s current path of accel- 16 erating the tapering and moving on to a series of interest rate increases over the course of this year? Ms. COOK. Senator, thank you for that question. I am certainly. When I think about these issues, I would like to look at the data and evidence that would be at one’s disposal, if confirmed, to be able to make a decision about this. So I did say it was somewhere in between before, and I agree with the Fed’s path right now, as we are speaking. But when we get to a decision point I would look to the data, the evidence that would be made available at that time. Senator TOOMEY. OK. Well, there is a tremendous amount of data that is out there. I mean, there are no secrets or mystery about what the Fed’s monetary policy is at any point in time. There is no secret or mystery about economic data generally. There are thousands of people across the country that are constantly analyzing it. It seems you have shifted from the in-between answer to now saying you support what the Fed is doing. It is confusing to me, and so could you give us some sense of how you view the policies that are available to the Fed, how you think about what we should be doing at this moment, have your thoughts on the Phillips Curve changed given the developments in recent years? Are you concerned about the change in what is happening with the shape of the yield curve? Do you think exchange rates are an important mechanism? How do we get inflation under control? Ms. COOK. Thank you for that question, Senator. I understand that everyday Americans are suffering from high inflation. This is something that I learned a lesson about more recently, probably than most people—I have lived in countries and advised countries—in a situation of hyperinflation. So I am motivated by seeing the suffering of workers, of businesses in just trying to plan their everyday lives and facing an inflationary environment. The way I would think about it would be, along with, if confirmed, along with the deliberations. So you are right. There are a lot of data available, a lot of data available. We do not have access to all the data the Federal Reserve has but we have a lot. And what we do not have access to is the deliberations at the time that they are being made. And I work collaboratively. I like to hear arguments as they are being made. And with respect to the shape of the Phillips Curve, what we know in economics is that this is an open research question. We know that there is a tradeoff between unemployment and inflation, but we do not necessarily know what that relationship is. And in times of uncertainty—and this is sort of my specialty—and places of uncertainty in emerging markets and developing countries, what we know is that we have to be patient with the data. We have to ask about the data, whether the data have changed, if they are reliable, still reliable, and still valid. So I would make sure that I pose questions of the data we were receiving and engage with the deliberations with my colleagues with an open mind, if confirmed. Senator TOOMEY. Thank you, Mr. Chairman. Chairman BROWN. Thank you, Senator Toomey. Senator Reed, from Rhode Island, is recognized. 17 Senator REED. Thank you very much. Ms. Raskin, in your opinion is the banking community more and more aware of the impacts economically on climate change and taking steps to alter their behavior? Ms. RASKIN. Well thank you, Senator Reed, for that question. In conversations with bankers, you know, over the course of my years, I open conversations with discussions of risk. What are they seeing as emerging risks? What are they concerned about? I would say the number one issue that they talk to me about has been in the realm of cybersecurity. When I ask bankers, you know, what keeps you up at night it is usually the sense of being under constant threat of cyberattacks. Why is it the financial sector that seems to have a target on its back when it comes to cyberattacks. That is where the money is, right? So you would be really amazed to learn how much money banks have spent actually trying to defend themselves against these cyberattacks. They have set up war rooms where they are constantly trying to fend off the constant threat of a cyberattack. And why does it matter? It matters because it can actually destabilize a financial institution. In the early days of cyberattacks, you saw banks shut down in very brief moments. As the cyberattacks have become more voluminous and more varied in their methods and in their vectors, you start to see now a pattern by which the cyberintrusion has moved into the deep recesses of the bank’s plumbing, and this actually has presented great risk. So cybersecurity. And this, by the way, has been one of the hallmarks of the work I did at Treasury, where we attempted to put together sort of a five-pronged approach to work with the financial sector, help the financial sector defend itself against cyberattacks. And we did this through various approaches having to do with enhancing baseline protection, information sharing, response and recovery, deterrence, figuring out how to prioritize and coordinate. This was work that also brought into play law enforcement and the national security apparatus. So to do cybersecurity, to deal with this risk effectively I think requires a multisector approach. And we also know we have in our American system a somewhat fragmented set of regulators, and one thing that was important from the financial sector’s perspective is to have one voice here. So one critical piece of work in the area of cybersecurity was to make sure that the regulators were speaking consistently so that the financial sector was not getting confused here regarding who is saying what. After we were able to bring together the work of the different agencies within the U.S. Federal Government, you know, it occurred to us that, hey, cyberthreats really do not have borders here. So we needed to move this work internationally, and there was quite a bit of work amongst the G7 countries to build defensiveness in their own financial sectors. And this resulted in a very strong document called ‘‘Fundamental Elements of Cybersecurity for the Financial Sectors of the G7.’’ So this was a prominent piece of cybersecurity risk management that was adopted. So cybersecurity, in short, that is the number one risk that I hear about. I hear about other risks too, and I certainly am hearing 18 quite a bit of focus on the effects of climate. Climate also is something that banks have been raising, certainly in my conversations. But thank you for your question. Senator REED. Thank you very much. My time is about to expire so Dr. Cook and Dr. Jefferson, I was very impressed in our meetings. I look forward to supporting you, and I will have some questions for the record which I will forward to you. Thank you very much. Thank you, Mr. Chairman. Chairman BROWN. Senator Scott, from South Carolina, is recognized. Senator SCOTT. Thank you, Mr. Chairman. I would like to associate myself with Senator Toomey’s comments about the harmful views of Ms. Raskin. I think Senator Toomey asked a very honest, simple question. Do you mean what you say today or did you mean what you have been saying for years, is really the basic question he is asking. Because it is indeed dangerous to use one’s power as a regulator to pick winners and losers, and you have advocated for that. And to discriminate against industries that you find distasteful would be a harmful precedent for the Fed. Ms. Raskin’s public comments of politicizing the Fed and using this extraordinary power in ways that would harm millions of Americans is more than just a little concerning. A worker’s hard-earned dollars does not go as far in today’s economy as it used to. This inflation-fueled economy is eroding the spending power of everyday Americans working paycheck to paycheck. The Democrats’ tax-and-spend approach to fiscal policy has driven up prices to a 40-year high since taking office just a little over a year ago. Folks at home in South Carolina keep telling me that they have too much month left at the end of the money. Why is that? Well, gas is almost 50 percent higher. Utilities nearly 25 percent higher. Used cars nearly 40 percent higher. Food, clothes, and shoes, higher, higher, higher. Now I am concerned that this Administration and their chosen regulatory nominees want to make life even more difficult for those hard-working Americans working paycheck to paycheck to bridge these inflation-driven income shortfalls. In 2020, the Federal Reserve Board published a study on the cost of making a small-dollar loan. Ms. Bloom Raskin, are you familiar with that economic research from the Fed? Ms. RASKIN. No, I am not but I would like to learn more. Senator SCOTT. Yes, ma’am. Well, one of the findings of that research was—and I found it to be particularly alarming—was that the report found that APR rate caps, even at 36 percent, would effectively eliminate lenders’ ability to extend consumer loans under $3,000. I am not sure if you realize the powerful impact on eliminating loans at $3,000, because that means that those Americans living in marginalized communities like the one I grew up in would have to turn to pawn shops or to a market that does not exist, a market that is not regulated, that is not safe, and certainly a market that would not be reliable. That same year, you broadly characterized a spectrum of existing small-dollar consumer credit options as a serious threat to low-in- 19 come communities before endorsing legislation to establish a 36 percent interest rate cap on all consumer loans. You further justified your support of a Federal cap by stating opposition to such a cap is based either on a misunderstanding of the needs of low-income communities or an out-and-out support of predatory lending. Ms. Raskin, I am opposed to a national APR rate cap, even at 36 percent, because it simply eliminates an entire market of smalldollar loans for people who need access, and according to the Fed’s report—I hope you have an opportunity to study that report—it suggests that if you cap it at 36 percent you fully eliminate a market for people like the one I was, and my mother working as a single parent 16 hours a day, looking for access to loans, eliminating that market simply means that you lose the opportunity to fix your tire if it blows, or you lose the opportunity to deal with the transmission, as we had to back in those days. And so what I am talking about is a real concern, not a philosophical one, about what we do for Americans who lose access to the market because we decide for them what the market should look like. And I think that is a dangerous place to be. But your characterization that either you are someone who does not understand low-income Americans or you are someone who supports the predatory industry. And as that kid, I have got to say, I am not sure which one you would call me. Am I the person who simply does not understand the needs and challenges of low-income Americans, or do you put me in the category of someone who is just a cheerleader for predatory lenders? Ms. RASKIN. Thank you for that question, and you are, you know, exactly right. Small-dollar loans, I think, are a very important source of credit, really to all Americans but particularly those that need access to credit in a timely way. The report that you are talking about, I look forward to looking at it and understanding its methodology and how it came to the conclusions that it did. But you are exactly right and put your finger on an important challenge, which, of course, is the availability of safe credit for people when they need it. I think that there is more that can be done in terms of providing access to safe, affordable, small-dollar loans. I am aware that there is work underway to be looking at this, and I think from that perspective it is an important issue that you have put your finger on. Senator SCOTT. Thank you, ma’am. I am out of time. Let me just simply say this, sir. Thank you for your response, and I will say that we led the efforts to have an interagency framework developed around small-dollar lending, and the Fed participated in that process. And I do look forward to your response after seeing the report. Thank you. Chairman BROWN. Thank you. Senator Menendez, of New Jersey, is recognized. Senator MENENDEZ. Thank you, Mr. Chairman. Just to follow up on this conversation, you know, I have made it my mission to try to not figure out how high interest payments low-income borrowers should be able to pay but actually how do we end the payday lender, the check-cashing place, the pawn brokers, the portal of entry for this universe of Americans into our financial system. Because while we want them to get access to the ability to have such a loan, 20 I do not know why specifically, because of the nature of the status of what their income is, they have to be, you know, committed to such high interest rates. It seems to me that we should be putting our collective will and effort together to creating portals of entry for them. Having said that, let me congratulate all the nominations. I am glad to see the Biden administration is finally taking steps to bring greater diversity to the leadership of the Fed, but there is a lot more work to be done. Latinos are this country’s largest minority. They make up nearly 20 percent of the United States population and yet they have no—underline no—representation in Fed leadership. So my question to all of you, if you are confirmed will you commit to working with my office to increase the Latino representation at all levels of the Federal Reserve? A simply yes or no would work. Mr. JEFFERSON. Yes. Ms. COOK. Yes. Ms. RASKIN. Yes. Senator MENENDEZ. If confirmed, you will have an important role to play in the selection process for presidents and members of the board of directors at the 12 Federal Reserve banks. Would you commit to working to ensure that diverse candidates are considered for these positions? Ms. Raskin. Ms. RASKIN. Yes I will, Senator. Senator MENENDEZ. OK. Ms. COOK. Yes. Mr. JEFFERSON. Yes. Senator MENENDEZ. Thank you. So Ms. Raskin, one of the lessons of the 2007 global financial crisis was that excessive incentivebased compensation plans encouraged Wall Street executives to take ever greater risks that ultimately pushed our economy into a devastating recessing. When we passed Dodd–Frank, one of the provisions I was able to include, that Congress ultimately passed, instructed the financial regulators, including the Fed, to jointly issue rules to rein in these practices. But in the nearly 12 years since Dodd–Frank was enacted we have seen the CEO-to-typical-pay ratio balloon to over 351-to-1, as well as a number of scandals, including the London Whale, Wells Fargo fake account scandal, Archegos, and all of which seem to be tied to executive pay incentives. What we have not seen, however, is a strong incentive-based compensation rule finalized by our regulators. So if confirmed, will you commit to working with the other financial regulators to develop a strong, incentive-based compensation rule? Ms. RASKIN. Thank you, Senator, for that question, and that was—you are correct—a requirement in the Dodd–Frank Act. It was a requirement with a deadline, and as far as I know that deadline has happened and still there is no rule. There is guidance but there is no rule, and yes, the answer, in short, is yes, I would work to implement the law. Senator MENENDEZ. Thank you. That is a correct observation. It is well past the time that Congress intended. Also finally in that regard, would you make it a priority to finalize the rule by the end of this year, if you were confirmed? 21 Ms. RASKIN. Well, if confirmed and I were there I would certainly look into the issue as to the reason for the delay. I believe there are a number of agencies involved in this, so I would certainly commit to look at this issue. Senator MENENDEZ. There are, but we need leadership to move the process forward, so I look forward to you having that leadership. Dr. Jefferson, if confirmed, you will have some difficult decisions to make in the coming months and years with regard to monetary policy. Inflation is running above desired levels, but if we do not critically examine why that is the case, the Fed’s response could be counterproductive. Maybe it could even harm the recovery. Do you agree that the inflation levels we are currently seeing are mainly being driven by supply chain bottlenecks? Mr. JEFFERSON. Thank you for that question, Senator. I believe that the inflation we are experiencing now has multiple components to it. Certainly the pandemic is a very important impact with regards to the supply side. We know that the supply chain effects caused bottlenecks, and for the given level of demand, supply is not able to meet it, and that puts upward pressure on prices. Senator MENENDEZ. And finally, how does the supply side nature of the current inflation inform the Fed’s response? Mr. JEFFERSON. Well, Senator, the tools of monetary policy really cannot address these developments that occur on the supply side in terms of resolving them. But the mandate given to the Fed by the Congress is very clear, that the Fed has to be mindful of maximum employment, and equally it has to be aware of price stability and undertaking policy to preserve price stability. So in this moment, Senator, the inflation rate is high relative to the Fed’s target, and so the directive is clear. The Fed must take steps to bring inflation back in line with its targets. Senator MENENDEZ. Thank you, Mr. Chairman. I have some other questions for the record. I have not had a chance to meet these nominees but I look forward to your responses. Chairman BROWN. Thank you, Senator Menendez. Senator Kennedy, from Louisiana, is recognized. Senator KENNEDY. Thank you, Mr. Chairman. Dr. Jefferson and Dr. Cook, I may not get to ask you many questions today because I want to concentrate on Ms. Raskin’s proposal to change the mission of the Federal Reserve. But I have read about both of you. It is clear to me we disagree on some things in terms of our politics, but in America you can believe what you want. That is why it is such a great country. Dr. Jefferson, I believe you are at Davidson. You are a professor there? Mr. JEFFERSON. Yes. Senator KENNEDY. There is no better place in America to get a liberal arts education. Dr. Cook, you are a Truman scholar? Ms. COOK. Yes. Senator KENNEDY. And you are a Marshall scholar. You were at St. Hilda’s? Ms. COOK. Yes. 22 Senator KENNEDY. OK. Have you ever met a Marshall scholar that was a dummy? Ms. COOK. No, Senator. Senator KENNEDY. Me neither. The only advice, for what it is worth, that I have for each of you is, number one, please do not change the mission of the Federal Reserve. Please do not let it be politicized. And number two, do not get caught up in the group think over there. Only dead fish go with the flow. Do not get caught up in the group think. Now, Ms. Raskin, in May of 2020, the world economy is melting down because the Government shut it down. We are trying to hold it together with baling wire, duct tape, spit, and happy thoughts. And you say that is great, but we ought to let oil and gas companies go broke. Did you really mean that? Ms. RASKIN. Well, thank you, Senator Kennedy—— Senator KENNEDY. You are welcome. Ms. RASKIN. ——for that question. And the Federal Reserve has particular mandates—— Senator KENNEDY. I know about all that, but did you—I mean, did you mean it? You said it. Here it is, big as Davos. I read the op-ed. You said save everybody but the oil and gas industry and let them go broke. Did you really mean that? Ms. RASKIN. So I have been clear on my views. The whole point of the op-ed was that the Fed should not pick winners and losers. Senator KENNEDY. Except for oil and gas. You said they ought to be allowed to go broke. Ms. RASKIN. The Fed should not pick or favor any sector at all. Senator KENNEDY. Then why did you say it? Ms. RASKIN. The Fed is not in the business of choosing winners and losers. Senator KENNEDY. Then why did you recommend to them that they let oil and gas go broke? Ms. RASKIN. I did not recommend—— Senator KENNEDY. Yes, ma’am. I read the op-ed. There it is. I am not going to quote it to you, but Senator Toomey pointed it out. Did you mean it? Ms. RASKIN. Senator Kennedy, I want you to understand the proper role of the Federal Reserve. The Federal Reserve should not be choosing winners and losers. Senator KENNEDY. Yes, ma’am. So you disagree with the editorial? Ms. RASKIN. The editorial was one that I wrote, and I wrote it in the context of the Federal Reserve’s emergency lending facilities. This was a special program set up by the CARES Act, by the Congress, that appropriated taxpayer money. This was an issue quite unlike the issue of supervision and—— Senator KENNEDY. And you said do not give the money to oil and gas. Let them go broke, because in my opinion they are bad for the environment, didn’t you? Ms. RASKIN. I want you to understand the context for that article. That article did not have to do with supervision and regulation. Senator KENNEDY. Dr. Raskin, you said it. You ought to own it, OK? You ought to own it. Ms. RASKIN. I am sorry? 23 Senator KENNEDY. You said it. You ought to own what you said. I would respect you more if you did. Let me move on to this business of allocating capital, and look, this is America. You can believe what you want, and I mean that. But I do not agree with your mission to politicize the Federal Reserve. Ms. RASKIN. I do not think the Federal Reserve should be politicized either. Senator KENNEDY. Well then why did you say it? Why did you say, in this June 2020, piece, quote, ‘‘Federal regulatory bodies should allocate capital’’? Ms. RASKIN. It is not the role of the Federal Reserve in supervisory or regulatory matters in its functioning as—— Senator KENNEDY. Then why did you write it? Ms. RASKIN. It was written in a context, Senator, that had to do with emergency lending. It did not have to do with the context of supervision and regulation. Senator KENNEDY. I feel strongly about charter schools, OK, if some President or some Chairman of the Federal Reserve said, ‘‘Let’s all get together and allocate capital away, and lean in on all the banks so they do not fund charter schools.’’ Do you support that? I mean, you support driving oil and gas industry into bankruptcy. Do you think that would be a proper role for the Federal Reserve? Ms. RASKIN. No. Obviously not. The Federal Reserve is not to get involved in allocating credit to any particular sector. Senator KENNEDY. So you changed your mind. Ms. RASKIN. I have made myself completely clear. The whole point of the op-ed was that the Fed should not pick winners and losers or expose taxpayers to undue risk. Chairman BROWN. Senator Kennedy, your time has expired. Senator KENNEDY. Well, now you went 3 minutes over, Mr. Chairman. Chairman BROWN. I did, and so did Senator Toomey, but we need this hearing done by 11. Senator KENNEDY. Well, can I ask one more? Chairman BROWN. No. You have already gone 2 minutes over. Senator Warner, you are recognized, from Virginia. Senator WARNER. Well thank you, Mr. Chairman. I would say to my friend from Louisiana I think your appropriate admonition about only dead fish go with the flow, maybe that could be applied to both sides on our partisan basis too. Senator KENNEDY. Well, I agree with that. I do not even know what parties they are in. Senator WARNER. I understand. I appreciate that. Ms. Raskin, it is good to see you. I do want to note, we all know you have got progressive views but I have been actually very surprised and pleasantly surprised by the number of Virginia bankers who have had experience with you and believe very much that you are a fair and balanced regulator. And I hope that is reflected in the record as well. Former heads of the Independent Community Bankers and others have come forward on supporting you, and again, I think that bodes well for you. 24 I am also a little surprised. My understanding of the Fed’s role and responsibility is also to look at systemic risk. And I tell you, in my State, when we call, it, you know, Hampton Roads, our tidal regions, Norfolk, Virginia Beach, and others, they have huge, huge risks to those economies because of sea level rise. Now they do not call it climate change because that may not be the politically appropriate terminology, but I sure as heck know that the banks, financial institutions, political leadership, Democrat and Republican, on both sides in Hampton Roads view sea level rise as an incredibly, incredibly significant systemic risk, and I believe that risk is amplified around. I think my friend, the colleague from Louisiana, they have that same challenge around New Orleans and elsewhere. So I do think, as we think about both questions of full employment, systemic risk, these issues are extraordinarily relevant. I also have to tell you that one of the things I was hoping to raise with you, Senator Reed raised and you kind of took the answer and ran with it, and that was cyber, because I find when I talk to bankers, when I sit in my role as Intelligence Committee Chair, cyber is an omnipresent risk, and we should all be alert now. God willing we are not going to see military action coming out of Russia with Ukraine, but should there be, a component part of that will be cyber. And as we saw from the Russian attack against Ukraine in NotPetya, you cannot limit a cyberattack to a geographic area. There were literally tens of billions of dollars of losses in America due to the NotPetya attack in 2015. So my hope would be that cyber will continue to be a focus, and you have addressed it pretty well. But I want to know if there was anything else. You have had experience in cyber. Was there anything else? You had a pretty comprehensive answer. And I do want to get one other question in for you and Ms. Cook, if possible, but I want to give you another chance. Ms. RASKIN. Yes. I appreciate your underscoring what certainly has been my experience in talking to the financial sector regarding cybersecurity. The threats are actually evolving at a very quick pace. This is a type of warfare, you know, as you might imagine, and the defensiveness of the financial sector I think is really at stake here. Obviously, you know, it is not the role of the Fed, certainly, to stop cyberattacks, but I do think it is important from a supervisory and risk perspective to make sure that the financial sector feels that it has the defensiveness. Senator WARNER. Would not a massive cyberattack that could potentially bring down part of our financial system, while there are reporting requirements in the financial system there is not for the balance of the economy. We have got a bipartisan bill that was going to get into the defense authorization that would at least require some level of mandatory reporting. But a catastrophic cyberattack against our financial sector, would that not be a systemic risk? Ms. RASKIN. Yes, I think it could. Senator WARNER. I agree with you. Let me move quickly, because again, I want to honor the Chairman’s request to get all the questions in, and I would like you to address, and I know Dr. Jefferson and I talked a little bit about 25 this. But I would like to get at least you and Dr. Cook on this, and I will come back to Dr. Jefferson in subsequent questions. CDFIs, MDIs, critically important role. I think you both have experience with them. How do we make sure that the Fed can do more to shore up that critical component of our financial sector, because clearly lending to low- and moderate-income individuals has got to be a role if we are going to have financial stability, economic stability, and close to full employment. Either one of you, please. Dr. Cook, do you want to take that? Ms. COOK. Thank you for the question, Senator. I sit on the board of a CDFI and I have learned a lot about it, and I think the Federal Reserve is beginning to engage in discussions about CRA reform. And I think part of that is shoring up the funding for CDFIs. They are critical in terms of getting funding to where capital does not go, whether we are talking about urban areas or rural areas. But certainly this is important for entrepreneurship, for the dual mandate, the carrying out of the dual mandate, especially maximum employment. So thank you for your support of CDFIs, Senator. Senator WARNER. And I think huge opportunities with CRA reform. Thank you, Mr. Chairman. Chairman BROWN. Thanks, Senator Warner. Senator Hagerty, of Tennessee, is recognized. Senator HAGERTY. Thank you, Mr. Chairman. First I would like to direct my first questions to each of the nominees, and congratulations to you on your nomination. First I would like to ask each of you, have you currently or have you ever embellished any part of your resume, your background, or your publications. I will start with you, Dr. Jefferson. Mr. JEFFERSON. No, Senator. Senator HAGERTY. Ms. Bloom Raskin. Ms. RASKIN. No, sir. Senator HAGERTY. Dr. Cook. Ms. COOK. No, sir. Senator HAGERTY. Dr. Cook, whether intentional or unintentional, it appears that you made a number of omissions in the paperwork that you submitted to this Committee, and you have made several mischaracterizations of your background. But even more concerning to me, with respect to your nomination, is that your background, although very impressive—that you covered with Senator Kennedy—does not seem related to the mission of the Federal Reserve. As I look at your list of publications and your speeches, it seems more like social science than it does economics and monetary policy. Can you describe for me in more detail what your economic specialty is? Ms. COOK. Senator, thank you so much for that question. 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. But I would like to tell you about my academic record, and that is relevant. I have a Ph.D. in economics from the University of California at Berkeley. I specialized in macroeconomics and international economics. 26 Senator HAGERTY. I am aware of that. I would like to get to that in the questions for the record. There are a number of issues about claiming that articles were peer reviewed when they were not, the characterization of your academic affiliations, but we will get to that in the questions for the record. My question for you now is if you would underscore what your academic specialty is and how it is related to monetary policy. Ms. COOK. Sure. I would answer that in several ways. First, I specialize in managing financial crises, and I have done that in several instances. At the Treasury Department I was at the financial crisis think tank and worked closely with John Taylor, with Secretary Summers, and others in managing financial crises. At CEA I was the person who was in charge of managing the eurozone crisis at CEA, and I worked collaboratively with NSC to do that. So I have publications that are related to banking reform and recognizing systemic risk. So I take the research that I do and I turn it into something in the field, and that is what I do at a land grant institution. Senator HAGERTY. Thank you. Well, monetary policy is a very blunt and a very potent tool, and I would have expected someone with deeper experience in the monetary policy realm. But I appreciate you being here and thank you for your answer. Ms. Raskin, I would like to turn to you. I want to talk to you about the actions last December that took place at the FDIC. There, CFPB Director Rohit Chopra and Interim Director Martin Gruenberg took actions to basically eviscerate the Chairman’s role there at the FDIC before her term expired, and it was deeply troubling to me and a number of Members of this Committee. It broke historical precedent, it was a remarkable undermining of the independence and the integrity of our financial regulators, and I want to ensure that a situation like this does not happen at the Fed. In her nomination hearing in front of this Committee, Governor Brainard committing, committed to deferring to the Fed Chairman to set the agenda at the Federal Reserve Board. So Ms. Raskin, if you are confirmed, do you commit to doing the same? Ms. RASKIN. Yes I do, Senator. Senator HAGERTY. Thank you. The last thing I want to see is another coup d’etat like we saw at the FDIC, and this Committee is here to backstop and ensure that that does not happen. Ms. Raskin, another questions for you. Are higher gas prices good or bad for America? Ms. RASKIN. Thank you, Senator. I have to say, higher gas prices really do hit. In my neighborhood they are up to $3.33 a gallon. You know, you go into a gas station now to fill your tank and you say, you know, should I actually really fill it? I mean, maybe you—— Senator HAGERTY. We are running tight on time. Is that good or is it bad for America? Ms. RASKIN. Well it certainly hurts your pocketbook. Senator HAGERTY. It absolutely does that. And I am very concerned, given the level of inflation that we are experiencing right now and the Fed’s role with respect to inflation, the policies that you have supported, as my colleague, Senator Kennedy, discussed with you, I am very concerned about weaponizing the Fed and 27 using it to attack industries like the oil and gas industry, particularly right now when we see energy prices through the roof. This sort of move would not only make inflation worse in America when it is already running rampant, but it would also make us more dependent on others, for them to supply oil and gas to us because you want to choke off oil and gas here in America and make us less secure as a Nation. So it is very concerning to me, and again, I realize we are out of time but I would like to underscore the fact that I think it is highly inappropriate to begin to weaponize the regulatory construct of the Federal Reserve in any manner that might be pursuing issues outside the mandate of price stability and full employment. Thank you, Mr. Chairman. Chairman BROWN. Thank you. Senator Cortez Masto, from Nevada, is recognized. Senator CORTEZ MASTO. Thank you. Let me ask, right off the bat, thank you, first of all, all three of you for the opportunity to meet with you and have a conversation with you. But let me ask you this. The board that you are looking to be nominated to, there are seven members. Can any single one member weaponize the mission of the board? Yes or no. I will start with Ms. Raskin. Ms. RASKIN. No. Ms. COOK. No. Mr. JEFFERSON. No. Senator CORTEZ MASTO. Thank you. That makes me feel much better. Dr. Cook, you have held many high-profile leadership posts. Let me ask you about your previous leadership positions with other regional Federal Reserve banks. I know you serve on the Advisory Council for the Opportunity and Inclusive Growth Institute, led by the Federal Reserve Bank of Minneapolis, and you also are a board member for the Federal Home Loan Bank of Indianapolis. How have these positions prepared you to serve on the Federal Reserve Bank? Ms. COOK. Thank you for that question, Senator. I have come to know the needs and opportunities associated with rural communities through my service through the Federal Home Loan Bank of Indianapolis. Certainly community banks are struggling. There has been a secular decline in them over the last 30 years. But they provide absolutely critical capital to small communities and places where capital does not show up. My membership on the board of directors of CDFI, same thing. CDFIs provide capital. They are pillars of their communities, where capital does not typically flow. And what we know about the United States is that entrepreneurship is a tried-and-true path to the middle class, and both those institutions, whether through affordable housing through the Federal Home Loan Bank of Indianapolis or through supporting entrepreneurs would help to support this American dream of entrepreneurship. So I have been grateful for those opportunities and they would inform, if confirmed, my deliberations on the Federal Reserve. Senator CORTEZ MASTO. Thank you. I appreciate that. I also really appreciate the opportunity that I see before me. I think that di- 28 versity is important for this particular board because it is important that the members really mirror, represent the rest of the country. How are we going to understand the needs of so many individuals across the country if we do not have that representation at all levels? So I appreciate all of you appearing before me today. Let me ask you, Ms. Raskin, we worked so hard during this last pandemic to appropriate the CARES bill, the American Rescue Plan, the Infrastructure Investment and Jobs Act, and they provided important relief to families while also looking to do long-term investments in health and housing and infrastructure. I also know, coming from Nevada, that the last financial crisis, it took us 7 years to come out of that financial crisis. So my question for you is, what were the lessons that we learned from that last financial crisis and how did they help us as we look to this financial crisis to avoid that extensive economic pain for Americans during this pandemic? If you would reflect on that. Ms. RASKIN. Yes. Thank you for that really interesting question, Senator. And, you know, I think the lessons are still to be learned, because we have not completely emerged, certainly, from the effects of the pandemic. But I think you are right to point to differences in approaches both from the perspective of monetary policy and fiscal policy that were taken and the extent to which, different mix of policies had an effect. I mean, in one dimension I think what we saw was that the financial sector seems to have done quite fine during what was a massive blow that came from the pandemic. That was good to see and suggests certainly something about the resilience that the financial sector had going in and the mix of policies that were available to respond. So I think this is an evolving question, but it is one we should always, as policymakers, and if I were confirmed I would urge us to always be trying to think back. I mean, it is pretty amazing that for many of us now there have been two crises in our lifetimes. So there are things to learn, and I think that trying to understand those learnings will certainly help as we continue to build economic resiliency going forward. Senator CORTEZ MASTO. Thank you. I know I have gone over my time. Dr. Jefferson, thank you again for meeting with me. I will submit the remainder of my questions for the record. Congratulations to all three of you. Chairman BROWN. Thank you. Senator Lummis, of Wyoming, is recognized. Senator LUMMIS. Thank you, Mr. Chairman, and welcome, nominees. My questions are for Ms. Raskin. I would like to ask you about Federal Reserve master account access. This is an issue of great interest to Wyoming and my constituents. I asked Chairman Powell about it. I asked Governor Brainard about it at their nomination hearings. I have been stonewalled at the Fed. And so I wrote an op-ed in the Wall Street Journal. Master accounts are the way banks access the payment system. Many nonbanks, including trust companies have applied and failed to receive a Fed master account. To my knowledge, there is one, and only one State-charted trust company that has a Fed master 29 account. It is a startup based in Colorado, formed in 2016, called Reserve Trust. Reserve Trust has repeatedly touted the value of the company’s Fed master account. Their homepage says, in 2021, one of the company’s investors underscored that Reserve Trust is armed with a master account at the Federal Reserve and direct access to the payment rails, the only company in the country that has that, the only fintech company. Now a Fed master account gives Reserve Trust an enormous advantage over everybody else, since it appears they are the only one who has it. And you are very familiar with Reserve Trust because you joined their board in May 2017, just 4 months after leaving Treasury. Right? Ms. RASKIN. Well, thank you for your question. I joined the board of Reserve Trust in 2017—— Senator CORTEZ MASTO. And your Treasury came after 4 years as a Federal Reserve Governor. Right? Ms. RASKIN. Four years? Well, after I left as a Federal Reserve Governor I went to Treasury as Deputy Secretary of Treasury. Senator CORTEZ MASTO. Right. You went from the Federal Reserve Governor to Treasury, and then to Reserve Trust’s board, and then Reserve Trust had its master account application denied in June 2017. But 1 year later, the Fed granted it a master account, in 2018. It is a mystery to me how dozens of fintech companies have tried unsuccessfully, and how Wyoming’s SPDI charter has been under review for well over a year, two-and-a-half years at the Fed, consulting with them about how to make this qualify. How did Reserve Trust get there so quickly? After Reserve Trust had their application denied, did you communicate with the Federal Reserve about Reserve Trust’s application? Ms. RASKIN. So, Senator, I was on the board of Reserve Trust, on the board of directors, from 2017 until 2019. Senator CORTEZ MASTO. And they got their master account in 2018. So did you call or communicate with the Federal Reserve about Reserve Trust’s application? Ms. RASKIN. Well, certainly if you are suggesting anything improper I want to make very clear that I have, first of all, had the honor to serve in various public capacities, and each time I left I have been very mindful of the rules regarding departure. Senator CORTEZ MASTO. Well, it is my understanding you did call the Kansas City Fed in August of 2017 regarding Reserve Trust’s master account application. So I have significant questions about your involvement in Reserve Trust efforts to obtain a master account. So Reserve Trust is denied. You go on their board. Then they get a master account. Did you communicate with the Board of Governors about Reserve Trust’s application? Ms. RASKIN. So I can assure you that I have been very focused—— Senator CORTEZ MASTO. Well, who did you communicate with? Ms. RASKIN. First of all, I want to be very clear here. The Federal Reserve has approved plenty of master accounts—— 30 Senator CORTEZ MASTO. But not in fintech. You resigned from Reserve Trust in August of 2019. Correct? Ms. RASKIN. August 2019 I left the board of Reserve Trust. Senator CORTEZ MASTO. Correct. Now do you know Amias Gerety? Ms. RASKIN. Yes, I do know Amias Gerety. Senator CORTEZ MASTO. OK. So while you were number two at Treasury, Mr. Gerety was the Acting Assistant Secretary for Financial Institutions, and he reported to you. Right? Ms. RASKIN. He did not report directly to me but yes, he was at Treasury when I was there. Senator CORTEZ MASTO. And he is also a partner at QED Investor, which is now the controlling owner of Reserve Trust. So in 2020, QED Investor purchased the 195,000 Reserve Trust shares you received when you joined the board in 2017, and they purchased your shares for almost $1.5 million. Even in this town that is a lot of money for being on a company’s board of directors for 2 years. So let me recap. You leave Treasury, you serve on the board of Reserve Trust for 2 years, their first application for a master account is denied, but after the denial you call the Federal Reserve, and Reserve Trust receives a Fed master account, the only Statecharted trust company in the country to get one, and you walk away with $1.5 million. Something does not smell right with the way this played out. My State’s companies, my constituents have been stonewalled, have been slow-walked, and have not been able to get approval, even though they have been working with the Fed for 2.5 years on our very specific guidelines for getting master accounts. Now, Mr. Chairman, I do not know the details here, because the Fed has not provided us with any documents we have asked about Reserve Trust’s master accounts. But I think this requires additional scrutiny by the Committee, and I look forward to receiving it. Thank you, Mr. Chairman. I yield back. Chairman BROWN. Senator Warnock, from Georgia, is recognized. Senator WARNOCK. Thank you so much, Chairman Brown, and congratulations to Ms. Raskin, Dr. Cook, and Dr. Jefferson, for your nominations to leadership at the Federal Reserve Board. Congratulations to all of you. But I would like to take a moment to especially congratulate Georgia’s own Dr. Cook. As a child, Dr. Cook was one of the first Black children to integrate her public school, and has since spent a lifetime breaking racial and gender barriers. Since graduating from Spelman College, in HBCU I know a little bit about, across the street from my Morehouse College, located in the heart of Atlanta, Dr. Lisa Cook, you have committed decades of your life to pushing the field of economics forward and sharing your knowledge with the world. And based on your clear qualifications and readily apparent expertise, it is clear—it is clear—that your nomination to the Federal Reserve Board will continue our important work to have an economy that works for all Americans. 31 And we cannot ignore that your historic nomination to the Federal Reserve Board will serve as an inspiration for generations of young Black women, who would like to study economics and dedicate themselves to work in the highest levels of public service. If we are to have an economy that works for all Americans, the Federal Reserve Board needs to look more like all Americans. And so I am proud of your nomination, and Georgia is proud of your nomination, and I look forward to voting for you both in this Committee and on the Senate floor for your confirmation. Georgians are feeling the rise and the crunch of rising costs on their everyday lives, and as Chairman Powell said before this Committee during his own nomination hearing a few weeks ago, some companies may be raising prices simply because they can. We are seeing this in corporate earnings. Follow the money. The evidence is there. These costs are being borne most acutely by everyday Georgians and small businesses, having an adverse impact on our economy. For example, the average price for a gallon of gas in Georgia has gone up by 4 percent in just the past month. In Brunswick, that increase is almost 6 percent, down in old Brunswick, Georgia, all while profits among the largest oil and gas companies soar. So they are doing more than passing on the costs. Dr. Jefferson, when considering systemic risks to our economy such as inflation and increasing costs, what considerations do you give to corporations and wealthy executives choosing profits over the stability of our economy? Mr. JEFFERSON. Thank you, Senator, very much for your question. And the concern that American families have with inflation is real because they feel it in their pocketbooks, impacts what they are able to do from a week-to-week basis. It impacts their outlook for the future. And so what the Fed can do is think about the full menu of prices that American families have to contend with and conduct monetary policy in such a way that, on average, those prices are consistent with its target. With respect to the issues of concentration that you are indicating, there are other regulatory bodies that are more geared and prepared and skilled at looking at the concentration of industry. What the Congress has mandated that the Fed do is think about inflation overall, and if I were confirmed, I would keep the Fed’s focus on that and trust that other agencies of the regulatory structure would look closely at issues of concentration. Senator WARNOCK. So what kinds of tools might you use to address this issue? Mr. JEFFERSON. Well, Senator, the tools that are the Fed’s would not be able to meet the issues of industry concentration. On that side of the economy, that is not something that Federal Reserve instruments—I am thinking about concentration outside of the financial sector—that is not something that Fed policy can address directly. Senator WARNOCK. Well, it is something I am concerned about and it is why I asked the White House Supply Chain Disruptions Task Force to investigate these practices by international cargo carriers, for example, out in the port in Savannah where we were dealing with this issue and we were able to loosen $8 million to 32 help with the congestion there. But we are seeing these rising prices. Dr. Cook, how would you respond to these issues? Ms. COOK. Thank you for that question because I have seen those gas prices going up as I was vacationing in Georgia with my family over the holidays. I think that this issue, as Dr. Jefferson was saying, is largely outside the purview of the Federal Reserve. However, I think that it deserves more study, and we have, especially if there is any threat to financial stability, for example, or relates to the Fed’s supervisory role, that would deserve more study. Senator WARNOCK. Thank you so much. Dr. Raskin. Chairman BROWN. Senator Warnock, you—— Senator WARNOCK. I am out of time. Chairman BROWN. ——your time has expired. If you would, because Members want to go to the 11 briefing. Senator WARNOCK. Absolutely. Chairman BROWN. Senator Cramer, from North Dakota, is remote from North Dakota, I believe. Senator Cramer. Senator CRAMER. Thank you, Mr. Chairman. Thank you for accommodating this format. And thanks to all of our witnesses and congratulations to all of you on being nominated. I have been watching intently and taking some notes, and I want to explore a little deep, Ms. Bloom Raskin, on the context, your exchange with Senator Kennedy, where you were trying to explain the context of your editorial, your op-ed relating to risk and the oil and gas industry in particular, the fossil fuel industry, in particular. I went back and read that same piece after that exchange, to familiarize myself both with the content and the context. And you are right in that you were writing in response to the expansion of the Main Street Lending Program that we worked hard to get, because oil and gas industry, huge jobs industry and huge national security industry in our country, was being sort of set aside, ignored if you will, by the Main Street Lending Program. And yet we were building bridges for all kinds of other industries, not more important certainly than the oil and gas industry. So you are right that that was the context which you wrote in your piece, but as I read the piece you did not confine your advice or your opinions to simply the Main Street Lending Program. There was no strategic ambiguity whatsoever in your statements. And I am very concerned going forward, not just because there is a single nominee that shares these views that you share so vehemently and so rigorously, but rather that there have been lots of them in lots of areas, lots of agencies, and more than one or two with the Federal Reserve, various positions in the Federal Reserve. I am very concerned about that. I have appreciated your reiterating the script that the Fed’s job is not to pick winners and losers, but once you are in a regulatory role it is not just the regulations that matter but it is, as much as anything, the regulators themselves. So I have great concerns about your position and the increased power that you want to give to the Federal Reserve as it relates to allocating capital away from legal commerce. 33 You used an interesting word in describing the parameters as you see them. You used the word ‘‘resiliency.’’ That is an important word. It means something very important. But it also reads a lot into our economy as it relates to energy. And so I wanted to sort of flip the script a little bit on you and ask if you think that it is a risk that banks ought to consider if the market that they support has a less than reliable or resilient supply of energy. You know, if you are a Texas or other parts of the South or the Southwest, Midwest, that has failed resiliency tests in recent times, or the Northeast, or California, where they have gone away from baseload electricity, for example, and replaced it with more intermittent forms of electricity, that people actually die when that electricity does not work during certain times, or that manufacturing has to be curtailed during certain times because they are very energy dependent, is that a risk that you think that banks ought to consider and that the Fed ought to keep an eye on? Ms. RASKIN. So thank you, and thank you for attempting here to understand context. And I do want to underscore that the Federal Reserve, as far as I know, is not looking to expand its powers. The Federal Reserve has mandates, very clear mandates, that Congress has provided, and the Federal Reserve, I hope, and certainly if I were confirmed, needs to always act within those parameters. It is absolutely critical to independence. It is critical because it is the law. And it is necessary to not get into positions of regulatory overreach or regulatory matters that are way beyond the purview. And what is way beyond the purview? Well, one thing that is way beyond the purview is that it is banks, bankers, who are making the decision about who to lend to. That is not a Fed decision, and it never should be. I do not have any evidence to suggest that it is or that it would be, but it is not a regulator and supervisory function for a regulator to take over the basic business decision that the bank is making. And why is that? Because banks exist—first of all, they are private entities, right, and they are in the best position to know what kind of loans should be made. They are in the best position to know what kinds of terms need to be structured around any kind of credit extension. That is their expertise, and that is an expertise that I would argue needs to be maintained. So I certainly appreciate the cardinal principle that the Federal Reserve does not exist to be favoring any particular sectors, and the regulatory approach should not be in any way choosing certain sectors over others. Senator CRAMER. I know I am well over, Mr. Chairman. Thank you for indulging me. I will provide some more comments on the record. Chairman BROWN. Thank you, Senator Cramer. Senator Tester, of Montana, is recognized. Senator TESTER. Yeah. Thank you, Mr. Chairman and Ranking Member Toomey. I appreciate it. And Governor Bloom Raskin and Drs. Cook and Jefferson, thank you for being here. Look, I think it is critically important that the Fed gets all the information that they can when they are dealing with risk to our financial system, and I think that it is rather obvious that climate change has to be part of the information that you gather. And why 34 I say that is because I have been 44 years plus on our farm. It has been in the family for over 110 years, and things have changed. And the proof of that is that, I believe it was in 2020, 40 percent of the farmers’ income came from the Federal Government, because of consolidation in the industry and climate change. Last year we spent $140 billion of hard-earned taxpayer dollars on climate change issues. Banks are important. As somebody involved in agriculture, we need to have access to dollars. That is where it is at, is in the banks. We do not want these banks to go under, and I know that there are many on this Committee that say, ‘‘Give me one example.’’ I can tell you one of the reasons they have not gone under is because we have put out $140 billion last year and we have got crop insurance. Without those, those banks would be in serious trouble. But the truth is this. There has been a lot of discussion around what the Fed should be doing or should not be doing. This is question for you, Governor Raskin. In your role as the Federal Reserve or any other Federal or financial regulator, in your opinion do you believe that we should be discouraging banks, or you should be discouraging banks in the Federal Reserve or any other Federal regulator from lending to carbon-based fuels like coal, oil, or gas? Ms. RASKIN. No, I do not. Senator TESTER. Drs. Cook and Jefferson, do you agree with that opinion? Ms. COOK. I agree. Mr. JEFFERSON. I agree. Senator TESTER. OK. When Chairman Powell and Governor Brainard were before this Committee I asked them about the Fed’s independence, as I did each one of you when we met on Zoom a few days ago. I think it is absolutely—absolutely—critically important that the Fed remains independent. I saw former President Trump try to influence the Fed and take actions for his own political gain, not for the well-being of this economy, and I am grateful that Chairman Powell—and that is one of the reasons I supported him in the position as Chair—and the Board’s commitment to maintain that Fed independence under intense pressure. And I might add, political pressure from the right or the left is inappropriate on the Fed. So I want to know, because you guys answered this question correct and I thank you—you believe the Fed should be independent— could you tell me why it would be a mistake to allow politics to influence our Nation’s monetary policy? And be as brief as you can. I will start with you, Governor Raskin. Ms. RASKIN. Well thank you, Senator Tester. The Fed’s independence is absolutely sacrosanct. You are exactly right that it cannot be compromised in any way from political forces on any side. The supervision and regulation of the Fed, as well as the conduct of monetary policy has to be beyond reproach, and that is critical to our functioning as an economy and as a society. So I cannot state more emphatically the importance of independence. Senator TESTER. Dr. Cook. Ms. COOK. Senator, I have advised in a number of emerging markets and developing countries where the central bank was not inde- 35 pendent, and everyday citizens of those countries suffered tremendously as a result, typically with respect to hyperinflation or at least high inflation environments. And I would say that I would be committed to Federal Reserve independence, and I would make sure that everyday Americans did not suffer what I saw abroad. Senator TESTER. Dr. Jefferson. Mr. JEFFERSON. Senator, one of the assets on the Fed’s balance sheet is the trust of the American people, and that has built up over time because of the Fed’s adherence to the mandates given to it by the Congress. So that cornerstone of independence underlies all that the Fed could hope to achieve for the well-being of the American people. Senator TESTER. Thank you all for your testimony. Thank you, Mr. Chairman. Chairman BROWN. Thank you, Senator Tester. Senator Moran, of Kansas, is recognized. Senator MORAN. Mr. Chairman, thank you, and thank you to our nominees for being with us today. I congratulate you on the position you are in today. I have been very interested in the responses I have head both on television and in the Committee room, to Senator Tester and Senator Cramer in particular. I come here troubled. You seem to all say, particularly you, Ms. Raskin, the thing I want to hear: I want a Federal Reserve that is not going to pick winners and losers. You commit to that. You indicated in response to the question that you should not be regulating in a way that discourages banks from making independent decisions about whether or not they should loan to energy and oil and gas companies. That is the right answer from my perspective. What troubles me is that we all, in our politics, in our views, we want a result, and we seem less interested in the process by which we get that result. The Federal Reserve is not the entity to make the decision about whether this country moves forward or in a different direction with oil and gas, with energy production. It is certainly the free-market system but it is perhaps Congress, Congress or the President. It is not an Executive order. It is not a decision by the Federal Reserve. The decisions we make here, in too many instances, Republicans will set aside the process to get the result, the Democrats set aside the process to get the result, and it is not always about the result because the process is what makes us a free Nation. So I need greater assurance than what you are attempting to give me that you will not use the Fed to diminish the role of the energy sector, or any other private sector. I do not look at this any differently than if you came here to tell me you were going to use the Fed to promote an industry. You are neutral in what is a legal business in this country, and in my view you have no opportunity, none, to try to discourage the oil and gas industry from existing or prospering, just like you have no authority to decide that when we want solar energy or wind energy and we are going to promote it by regulations of our financial institutions. I am troubled by what Chairman Powell said in response to the Chairman in his questioning, that the Chairman is going to defer to you, Ms. Raskin, on this topic. And you said, in response to the 36 question of the Senator from Nevada, you responded that it takes all of you to make a decision. No one can do it. And so I am troubled by any of the nominees who have the belief that there is a path by which you can regulate a legally authorized, existing business. That is an issue for the political process. And we talk about transition. You all talk about transition. You know, the transition is societal shifts. It is gambles. It is predictions. It is not economics for the Fed to be engaged in trying to figure out the societal changes of our Nation. What am I missing? Ms. RASKIN. Well, thank you. The record for me is the record that I have had as a bank commissioner in the State of Maryland, already as a Fed Governor, and as Deputy Secretary of the Treasury, and I cannot state more emphatically than I already have that it is not the role of the Federal Reserve to get engaged in favoring one sector. Senator MORAN. So Ms. Raskin, if it is not the role—— Ms. RASKIN. Yeah. Senator MORAN. ——then are you saying you cannot do it and will not do it? Ms. RASKIN. I am saying I view it as outside the bounds of the law. The Federal Reserve was set up by Congress, and with particular mandates, and as a lawyer I live within those mandates. Senator MORAN. So let me ask you, as a lawyer, is there a path that you see, in any fashion, in which, if it is your view that the oil and gas industry, fossil fuels, need to be diminished in the role of this Nation, in our economy, is there any path for you to accomplish that as a member of the Federal Reserve? Ms. RASKIN. I certainly have not explored that and would imagine there is no such path. Senator MORAN. I wish you could say that more firmly, that there is not a path and there is nothing you can pursue. Ms. RASKIN. Do you have an idea for me? I mean, I am not sure I see any attempt in any supervisory context or within the existing mandates of the Federal Reserve that have been set up by Congress to do anything that would favor a specific industry. That is not how regulation and supervision is done. Senator MORAN. You are telling me I have nothing to worry about. Ms. RASKIN. I would be curious as to whether you are thinking of something in particular, but I certainly do not see—— Senator MORAN. No trick question. I just wanting to know if you have any plan, any path, any desire—— Ms. RASKIN. No. None. Senator MORAN. And if you had the desire, you cannot accomplish it. Ms. RASKIN. Correct. I have no desire, and if I had the desire I could not accomplish it. Senator MORAN. Thank you, Mr. Chairman. Chairman BROWN. Thank you, Senator Moran. Senator Warren, from Massachusetts, is recognized. Senator WARREN. Thank you, Mr. Chairman, and congratulations to all three of our nominees. It is good to see you here today. So let’s jump right in on climate change, and let’s focus on the Chairman of the Federal Reserve, who is supported by many of the 37 Republicans who have spoken out today and who are so alarmed about the conversations about climate. I would like to read a series of statements by Fed Chair Powell, who has been renominated by President Biden to serve another term as Chair. In response to a question I asked during his confirmation hearing last month, Chair Powell said, and I quote, ‘‘Our role’’—meaning the Fed’s role—‘‘on climate change is a limited one but an important one, and it is to assure that the banking institutions that we regulate understand their risks and can manage them. It is also to look after financial stability, and with financial stability the issue really is can something from climate change arise to the level that would threaten the stability of the entire financial system,’’ end quote. So I just want to go down the line here. This should be an easy question. Does Chair Powell’s statement on the Fed’s responsibility for ensuring that banks are managing their climate risks and addressing climate risk threats to the financial stability correctly describe your views as well? Professor Bloom Raskin, let’s start with you. Ms. RASKIN. Yes. That statement sounds correct to me. Senator WARREN. Thank you. Dr. Cook. Ms. COOK. Yes. Senator WARREN. Dr. Jefferson. Mr. JEFFERSON. Yes, Senator. Senator WARREN. Thank you. So we have four people— the Chairman of the Federal Reserve and these three nominees—who are aligned on the role of the Fed in dealing with climate change. Now when my colleague, Senator Ossoff, asked Chair Powell last year whether climate change had implications for the Fed’s dual mandate and its responsibility for financial stability, Chair Powell said, and I want to quote here, ‘‘I think it has implications for all of those things,’’ close quote, because, quote, ‘‘We know that the transition to a lower-carbon economy may lead to a sudden repricing of assets or entire industries, and we need to think about that carefully in advance and be in a position to deal with all of that,’’ end quote. Professor Bloom Raskin, starting with you, does this statement by Chair Powell also describe your views? Ms. RASKIN. Yes, it does. Senator WARREN. And Dr. Cook. Ms. COOK. Yes, it does, Senator. Senator WARREN. And Dr. Jefferson. Mr. JEFFERSON. Yes. Senator WARREN. OK. And when Chairman Brown asked Chair Powell about what the Fed would do to address the risks from climate change, Chair Powell said, and I want to quote, that ‘‘climate stress scenarios will be a key tool going forward.’’ Does everyone agree? Professor Bloom Raskin. Ms. RASKIN. Yes. Senator WARREN. Dr. Cook. Ms. COOK. Yes. Senator WARREN. Dr. Jefferson. Mr. JEFFERSON. Yes. 38 Senator WARREN. All right. I am going to do one more. These climate stress scenarios that the Fed are planning are, in Powell’s words, quote, ‘‘about assuring that the large financial institutions understand all the risks they are taking, including the risks that may be inherent in their business models regarding climate change over time.’’ Once again, going down the line, do you agree, Professor Bloom Raskin? Ms. RASKIN. Yes. Senator WARREN. Dr. Cook. Ms. COOK. Yes. Senator WARREN. Dr. Jefferson. Mr. JEFFERSON. Yes. Senator WARREN. Thank you. I will support Chair Powell’s nomination for another term running the Fed, but even he thinks that it is just common sense that the Fed should work to mitigate the risk of significant economic loss triggered by climate change. Central bankers around the world agree with him. Heck, this position is so noncontroversial that the previous Vice Chair for Supervision, Randy Quarles, who was appointed by President Trump and never met a rule he did not want to weaken, requested the Fed’s membership in the Network for Greening the Financial System, which is an international coalition of financial institutions that is working to meet the goals of the Paris Climate Agreement. So we really have to ask, what is going on here? Why are the Republicans so stirred up by a mainstream position? Why is it OK when Jerome Powell says that climate issues are part of the Fed’s mandate but it is not OK when Professor Bloom Raskin and other nominees say the same thing? Why is the Chamber of Commerce funding a multimillion-dollar campaign to kill any action by policymakers to address the climate crisis, and who is really footing the bill here? Perhaps the real problem here is that Professor Bloom Raskin is not willing to let big oil stand in the way of the Fed doing its job. The fossil fuel industry and their lobbyists and friends in Congress may not like that. But asking the Fed to ignore climate risk is to ask the Fed to defy its congressional mandate. An institution responsible for the security of our financial system and the growth of our economy cannot blind itself to climate issues. We are in a climate crisis, and we need regulators with backbone. I just want to mention one other thing before I quit here. I have long advocated for rewriting our ethics rules to prevent conflicts of interest, to close the revolving door, and to restore Americans’ trust in our political system. I believe that we must examine a nominee’s total balance of qualifications, but I have asked nominees from both the Republican and Democratic administrations to abide by higher ethical standards. I am discussing these standards with every Fed nominee and I look forward to their responses, including from those who are not at the hearing today. So again, congratulations to our nominees. I look forward to your confirmation. Thank you, Mr. Chairman. Chairman BROWN. Thank you, Senator Warren. Senator Tillis from his office is recognized, from North Carolina. 39 Senator TILLIS. Thank you, Mr. Chairman, and congratulations to all of the nominees before us today. You know, if you are confirmed you are going to have to vote on how things are supervised and regulated. This part of your job goes outside of the view of the public, sometimes by necessity, but some of it needs to be transparent. In one case, the Fed has issued or used an asset cap to restrict growth of a bank and its ability to compete. So I want to ask this of each of the nominees. In the instance the asset cap has been used, it has been for a number of years now, since the financial crisis, and it was a drastic penalty that I believe we now need to question whether or not it should be in place or whether we should provide clarity or a roadmap for growth going forward. So maybe starting with Mr. Jefferson and then Ms. Cook and then Ms. Raskin, I have got three questions for you. Number one, what are the conditions that you think would be reasonable to lift the asset cap? Another one, when will it be used again? And the third one, does a bank need to be perfect to get it lifted? Mr. JEFFERSON. Senator, thank you very much for your question. It sounds like it is very specific and in an area where I do not have expertise. And so what I would like to say in response to your specific questions is that if I were confirmed I would look forward to learning more about this particular set of issues, and I would welcome the opportunity to invest my time to work with you and your staff to become better educated about it. Senator TILLIS. OK. Just first off I should have thanked you for the time that we spent on the phone. I enjoyed the conversation. And you and I do not live too far apart, down in North Carolina. But we did talk about the need for a healthy ecosystem, and I think that these caps at the top end of the ecosystem, over time, might be damaging to the overall health and hygiene of the entire ecosystem, which includes small banks. Ms. Cook. Ms. COOK. Thank you for your question, Senator. The way I would look at it would be to assess the risk to the system and make sure that the financial system remains resilient. That is within the purview of the Federal Reserve’s role and bank supervision. Senator TILLIS. So would you—with that response I have got limited time. I am sorry to interrupt. I do not like doing that. But does that mean that we could look at rules of the road and get rid of this arbitrary cap, and that that is something that you would be open to discussing? Ms. COOK. It is something that, because, like Professor Jefferson, I am not as familiar with this particular issue, I would look forward to studying it with an open mind and having deliberations with my colleagues, if confirmed, with an open mind. Senator TILLIS. Thank you. Ms. Raskin. Ms. RASKIN. So, Senator Tillis, you point to a very important feature of regulation which is clarity, and I think that if there are ways to improve a regulation, by making it more clear I think is a huge plus, it is a huge service, and yes, I would commit to look at any rule or regulation that requires more clarity. 40 Senator TILLIS. Thank you. Professor Cook, you previously stated you agree with the statement ‘‘the Black unemployment rate is a better indicator of the health of the overall economy than a lot more standard metrics that many people use today.’’ Do you still stand by that statement? Ms. COOK. Senator, when I think about the unemployment rate in general it is not just one unemployment rate. There are many different unemployment rates. There are unemployment rates for—— Senator TILLIS. I am sorry. I am glad you have gone in that direction. I am about to run out of time, so what specific standard metrics do you believe should be discarded in favor of this or other metrics? Ms. COOK. Oh, I do not believe any should be discarded. I think we should, if confirmed, use as many different metrics as possible. The data are imperfect, so we should look at as many different indicators, from many different sources, from businesses, from consumers, from everyone in the economy. So I do not believe in primacy of one indicator over another. Senator TILLIS. Thank you. My time has expired, and we will submit other questions for the record. Thank you, Mr. Chair. Chairman BROWN. Thank you, Senator Tillis. Senator Smith, from Minnesota, is recognized. Senator SMITH. Thank you, Mr. Chair and Ranking Member Toomey, and welcome to our three highly qualified and experienced nominees, and congratulations, and thank you for your willingness to serve on the Fed Board, especially and particularly in this moment. And I look forward to supporting all three of your nominations. You know, the three nominees here today are highly qualified and dedicated public servants. Your experience and expertise and perspectives are much needed on the Federal Reserve, as our Nation navigates some really complicated economic times. And I want to say that I appreciated the excellent conversations I have had with all three of you, and have found you to be informed and reasonable and qualified and fully committed, I might say also, to following carefully the mandates and the authorities and the independent role of the Fed. Professor Bloom Raskin, I really appreciated our conversation and your commitment to the value of community banks and small banks. I shared the story of my grandmother, I think, who was the president of a small community bank, and your deep understanding of the value of small banks in a fair and resilient and stable financial system. And I must say you have been absolutely clear, both in public and in our private conversations, that you emphatically believe that the Fed has no role in picking winners and losers in our economy, including in the oil and gas sector. And maybe this is why, as Chair Brown noted, you have been confirmed with bipartisan support before. Dr. Cook, your experience and perspective on how all sectors of the U.S. economy need to work for everyone, and the role and the responsibilities of the Fed I think are authoritative, and I really 41 appreciated the chance to speak with you. And Dr. Jefferson, your extensive work on poverty and inequality will be invaluable as the Fed pursues its dual mandate of maximum employment and stable prices. And I also just want to note, as several have, that we all know that the Fed has traditionally been very short of diverse voices, and it is important, it is vitally important, that the Fed include diverse perspectives so that decisions that it makes are going to consider not just whether Wall Street is thriving but whether Main Street and small businesses and families everywhere in our country are getting ahead. I appreciate that I believe you will be, all three of you, in the perspective, in the position to bring that perspective forward. I just want to home in a little bit on a few things, Dr. Cook and Dr. Jefferson, to understand how your research and experience will inform your work on the Fed, in just the little bit of time I have. Dr. Jefferson, much of your academic research has focused on the labor market, which fits so well, and income inequality and poverty, which all of us on this Committee, I believe, are concerned about. How will your research inform your work on the Fed, do you think? Mr. JEFFERSON. Thank you so much for that question, Senator. And one thing that I think is important for us to do is look at the history of expansions here in the United States. And one thing that we see when we look at our history is that long, noninflationary expansions are highly inclusive. That is, the longer the expansion, the wider they tend to be, and the more people are brought into employment and prosperity across social and economic groups. So if I were confirmed, I would very much want to advocate for policies on the part of the Fed that would lead to long expansions that are noninflationary. Senator SMITH. You are observing also that fairness in our economy is good for our competitiveness. It is good for our productivity. It is good for opportunity, and it gets exactly to—I mean, Paul Wellstone was not, as far as I know, an economist, but when he said we all do better when we all do better I think he was hitting exactly on what you were talking about from an economic perspective. Dr. Cook, I appreciated, in your testimony, you said, ‘‘My approach to complex problems is to be guided by facts and data and analysis and to work collaboratively.’’ You say, ‘‘I will do my work based on the facts and not politics,’’ and you pointed to Paul Volcker as a person who you admired for his unwavering commitment to a nonpolitical and independent Fed. Could you just say a bit, in the 10 seconds I have left, on how you will bring your experience to bear on the Fed? Ms. COOK. I will just say, in a word, that my experiences abroad have really opened my eyes and informed me about the dual mandate of the Federal Reserve, both full employment and stable prices. Because not all central banks have that dual mandate. They typically focused on stable prices. And my research also has informed this view through the avenue of innovation, which undergirds economic growth. And what I find is that broadening participation, through STEM, for example, in the innovation econ- 42 omy certainly helps us all, not just those individuals who participate. So that is what I would bring to the deliberations on the Fed, if confirmed. Senator SMITH. Thank you so much, Mr. Chair. Chairman BROWN. Thank you, Senator Smith. Senator Van Hollen is recognized, from Maryland, for 5 minutes. Senator VAN HOLLEN. Thank you, Mr. Chairman, Ranking Member Toomey, and welcome all of you. And Dr. Cook, Dr. Jefferson, Governor Bloom Raskin, congratulations on your nominations. I think all of you would serve the country very well, and our economy well, on the Federal Reserve, and I look forward to supporting your nominations. Mr. Chairman, I think you indicated I get just a little bit of leeway in sort of introducing again—— Chairman BROWN. You do, for sure. Senator VAN HOLLEN. ——Governor Raskin as a Marylander, and I want to thank her for her leadership and focus for a moment about her leadership as Maryland’s Commissioner for Financial Regulation during a very difficult time for our State and our country. That was the 2007–2010 period. And during that time she earned the respect of Maryland financial institutions, our community banks, and I have heard from a host of Maryland’s community banks about your preparation for the job that you have been nominated for and how well they believe you will serve our country in that capacity. We also have the statement from Camden Fine, who served as the head of the Independent Community Bankers Association, ICBA, during the time that Governor Raskin was the chief bank regulator in the State of Maryland. And I am quoting Camden Fine saying, ‘‘She is outstanding and she understands the role of the Fed Governors. She is a tough regulator—do not get me wrong— but she is very fair.’’ It seems that that is exactly the kind of person that we would want in this position, and that sentiment has been endorsed by others who have worked with Governor Raskin. The Conference of State Bank Supervisors noted that she understands first-hand how decisions made in Congress and within the Beltway have significant implications for the financial industry, local communities, and consumers. And 24 State and local treasurers and comptrollers said, ‘‘Sarah Bloom Raskin is a life-long public servant with an exceptional track record as a champion for consumer protection, prudent regulation, and financial risk mitigation.’’ And I have been listening to the testimony, Mr. Chairman, and I think Governor Bloom’s answers reflect that she clearly understands that her role is to focus on risk, across the board. And we would be doing a great disservice to our country if we asked her to ignore any particular risks in the system or to overly focus on any particular set of risks. She wants to look at all the risks, which is what she did as the Maryland chief bank regulators. And Governor Raskin, if you could just take a moment to talk about how that experience, during that very difficult time—we had a meltdown in the subprime mortgage industry in the United States which created catastrophic economic consequences for Amer- 43 ican families—can you talk about how your experience there informs your view of your current job? Ms. RASKIN. Certainly, and Senator Van Hollen, thank you for you remarks and your question, of course. So the role of the Commissioner of Financial Regulation in the State of Maryland, in the years that I served, which were the years of the successive waves of foreclosures, the weakening of some nonbank entities, and a general sense of hopelessness, which many of you may remember from the days of the financial crisis, really required an approach that was very collaborative. It was an approach that, for me, became, I think, the hallmark of how you go about regulation and supervision, which is to do it very collaboratively. Supervision and regulation cannot be done with one voice alone. You need the voices of many, and the many include not just experts who understand the theory of regulation and supervision, but the people who experience it, who live it day to day. The bankers in Maryland were my indispensable partners in moving through those hard months, and it was the bankers there that strengthened my sense, not just in the value of collaboration and in the value of working together to achieve good ends, but the importance of community banks. And I just want to say—and I just cannot say it enough—community banks are one of the finest features that we have in our financial sector. They provide safe and sound financial intermediation. They understand the community, the economies that they lend into, in a way that keeps them very sensitive and very attuned to what communities need. So I learned a lot from those experiences as the commissioner during those years, and many of those approaches became, for me, a way of thinking about how you move forward. Senator VAN HOLLEN. Thank you, Governor Raskin. I just, to my fellow Committee members, I can attest to Sarah Bloom Raskin’s very good judgment, good temperament, and somebody who looks at all the facts before making a decision. And I really encourage all the Members of the Committee to support her nomination, and I also, as I said, support the other two nominees who have been presented to the Committee as well. Thank you all very much. Thank you, Mr. Chairman. Chairman BROWN. Thank you, Senator Van Hollen. I believe Senator Ossoff is remote, in his office, but I am not sure. No, he is not. Senator Toomey, and then I will close. Senator TOOMEY. Thank you, Mr. Chairman. Let me just briefly wrap up my thoughts on this. First of all, I think Professor Jefferson confirmed what I have learned thus far. I think he is eminently qualified, knowledgeable, has the temperament and the experience to be a constructive contributor, and I look forward to supporting his confirmation. With regard to Professor Cook, I am very disappointed that yet again today I have been unable to elicit any kind of clear response as to how she views the challenges that we face specifically with regard to the inflation that we have, what kind of tools she would 44 be willing to use, her thoughts on the changes in our economy. There are just no clear answers, and that is disturbing. With respect to Ms. Raskin, I have to say this is one of the most remarkable cases of confirmation conversion I have ever seen, although she does not acknowledge the contradiction of what she has said today compared to the things that she has been saying and writing for years. Let me be very, very clear about where this is all heading. If Ms. Raskin is confirmed, there is going to be an effort at the Fed to start with a climate scenario analysis—that is what it is called— and you can be sure that that had better show all kinds of risks. And then the Fed will respond to that analysis. I do not know exactly how. Maybe it will be increased capital weightings. Maybe it will be exposure limits. But the idea will be to allocate capital away from the heavily carbon-emitting parts of our economy. How do I know that? Because Ms. Raskin has told us this, repeatedly, in writing, in videos. We just found a new campaign video she made, criticizing the Fed for including energy bonds when they were buying corporate debt. In her message it was clear that she would have preferred that they exclude that one category. That itself is another example of her advocacy for an allocation of credit. But rather than responding to that we just kept hearing this scripted mantra that the Fed should not pick winners and losers. But, of course, what she has advocated for in speech after speech and other venues is that the Fed should do exactly that. So, Mr. Chairman, it is hard to believe the strength of the conviction that the Fed should not do that which she has advocated the Fed to do for a very long time. And with that I will ask unanimous consent to enter into the record letters of opposition in concern to Ms. Raskin’s nomination from more than 60 union, energy, business, manufacturing, taxpayer advocates, and women’s organizations, 24 State treasurers and auditors, and Senator John Barrasso. I also ask unanimous consent to enter into the record letters of opposition to Professor Cook’s nomination from 11 taxpayer advocates and women’s organizations. Chairman BROWN. Without objection, so ordered. Thank you, Senator Toomey. That compares to my sterling comparison to the 1,000 letters and calls of support from such a wide cross-section of so many people, including, as Senator Van Hollen says, the Maryland community bankers. There has been a lot of hyperventilating about today’s nominees that is based on hyperbole and misrepresentation rather than their actual records and experience. I will note a couple of things. Senator Bloom Raskin has a long and distinguished record of public service, making consequential decisions about our economy. She brings a steady hand. She brings a clear-eyed focus—we saw that—to serving the American taxpayer. That is why this body has confirmed her unanimously—unanimously—twice, including this Committee and the Finance Committee. Her approach and character have not changed one iota since she was last time nominated to serve our country. Nowhere in her record can you find her making policy decisions that fit the character we have heard today, of someone who is extreme. She has 45 served on the Fed as a Governor before, and as a Governor she never advocated for the Fed to allocate private capital. If that is not evidence and proof, what could be? As we heard today, in her own words, Ms. Bloom Raskin is not in the business of telling banks whom to lend to. She did not do it before, and she said that is not how she views this job. To pretend otherwise is nothing more than a political tactic. What said in the New York Times editorial—and I have read it a number of times—has nothing to do with allocation of private capital. The mainstream view is that regulators need to consider how all risks could affect banks. Senator Tester’s discussion about $140 billion in climate costs just last year alone speaks to that. It is one of those risks. Look at President Trump’s Vice Chair for Supervision, the only person that has actually held this job prior to, I hope, a month from now when Governor Raskin is confirmed. Look at Randal Quarles. He developed the strategy for regulators around the world to understand and monitor climate risk while Chair of the Financial Stability Board. Ms. Bloom Raskin will simply continue the work begun by Chair Powell. The attacks on Dr. Cook are abhorrent. They were ginned up on the far-right blogosphere to discredit a highly respected economist with substantial monetary policy experience. She has a Ph.D. in economics. Plenty of other Board Governors never had that, including prominent ones today. I am disappointed my Republican colleagues repeat these ugly and baseless lies and spreading fake news. A wide range of organizations, as I have said, have written to the Committee in support of her nomination. Instead of these attacks I hope we can bring the focus back to American workers, putting American workers at the center of our economic policy, something the Fed, frankly, has not done through much of its history, workers finally starting to gain some power and higher wages and real job options in our economy. They are worried these wage gains are not going to mean much if prices continue to go up. All three of you clearly—Dr. Jefferson, Dr. Cook, Governor Raskin—have talked about the importance of combating inflation, putting it at the top. These costs have been going up for decades, like childcare and prescription drugs and housing. Balancing that dual mandate is always a tough job, and as we emerge from the pandemic that is unprecedented in our lifetimes there has never been more uncertainty in the economy, making these jobs even tougher. It makes it all more important that we have seven fully confirmed, seated, members of the Federal Reserve, thoughtful, experienced nominees. You could not sit here today and not be impressed by the thoughtfulness and the experience and the gravitas and the serious-mindedness of these nominees. We need a full Fed Board. Hopefully my colleagues will join me in supporting the President’s nominees. Thank you again to the three of you. I look forward to supporting all three nominations and leading this effort on the Senate floor. 46 I would like to enter into the record letters of support from 1,000 organizations and individuals, without objection. For Senators who wish to submit questions, these questions are due on Saturday, February 5th, at noon. To the nominees, we would like to have your responses by Wednesday, February 9th, at noon. Those are real dates, February 5th, February 9th. We want to do this vote on February 15th, so we need your cooperation. The Committee is adjourned. Thank you. [Whereupon, at 11:30 a.m., the hearing was adjourned.] [Prepared statements, biographical sketches of nominees, responses to written questions, and additional material supplied for the record follow:] 47 PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN In the first year of the Biden–Harris administration, we’ve seen tremendous economic progress: Record job creation. Rising wages. The fastest economic growth in almost 40 years. Last year, for the first time in two decades, our economy grew faster than China’s. Think of that—our economy is growing faster than China’s, for the first time in 20 years. Because of the action we took with the American Rescue plan and because of this President’s commitment to American workers, we are making historic economic progress—exceeding expectations. We are now at a pivotal moment in our recovery. The Omicron variant has caused COVID cases to increase in the last eight weeks, further straining our supply chains. These pandemic-related problems are causing higher prices that eat away at Americans’ paychecks. The Black unemployment rate is more than twice that of White workers. Women are slowly reentering the paid labor force, after too many were forced to leave at the height of the pandemic. As Fed Chair Powell said, ‘‘getting past the pandemic is the single most important thing we can do.’’ Chair Powell is right. The actions we take over the next several months will determine whether we have a truly robust recovery—with lower prices and higher wages and plentiful job opportunities, for everyone. Whether we have that kind of truly robust recovery, or whether our economy falters, and Americans are denied the opportunity to emerge from this pandemic stronger than before. And that brings us together today. We must have a fully functioning Federal Reserve Board—with all seven members—ready to meet these challenges. Ready to ensure our economy continues to prosper. It’s been almost a decade since we’ve had all seven board members. That’s what makes this so urgent. Governor Bloom Raskin, Dr. Cook, and Dr. Jefferson are the proven leaders we need at this critical moment. These three experienced public servants understand the importance of empowering workers through full employment, and the need to combat inflation so paychecks go farther. They are dedicated to Fed independence. They will uphold the Fed’s dual mandate—a mandate to ensure that all Americans have plentiful job opportunities at good wages, and to ensure that wage gains aren’t eroded away by exorbitant prices. And they know that when we keep our financial system safe, and when we support working families and Main Street businesses by putting workers at the center of economy, then our entire economy grows. Sarah Bloom Raskin is the President’s nominee to serve as the Federal Reserve’s Vice Chair for Supervision. She was the Maryland State Bank Commissioner, a Federal Reserve Governor, and Deputy Treasury Secretary—the number two position at Treasury. No one is better equipped than Ms. Raskin to protect Americans from risks that could bring down financial markets and institutions and wreck people’s savings— from cybersecurity threats to climate financial risk. Throughout her distinguished career, Sarah Bloom Raskin has worked with the smallest community banks and the largest multinational financial institutions. She’s worked with consumers, community groups, and businesses small and large to keep our financial system safe. Unfortunately, we’ve seen a coordinated effort by some to paint her as some sort of radical. That characterization requires a suspension of common sense. Look at her work— including on the Board of Directors at Vanguard, which prides itself on its low fees and making the market accessible to all Americans. And remember, she has received the support of every Republican on this Committee, and every Republican on the Finance Committee. In fact, the entire Senate twice confirmed her unanimously. Think about that—Sarah Bloom Raskin has been nominated to key economic posts twice before. And both times, every single senator—Republicans and Democrats—supported her nomination. 48 As Deputy Secretary of Treasury, Ms. Bloom Raskin led the Obama administration’s effort on cybersecurity resilience for the financial sector, a critical issue that requires vigilance to protect our economy and national security. She understands that we need to think about all the financial risks our economy faces—including the possible economic impact of severe weather and climate change. As we heard from Chair Powell, this is a priority for the Fed. Looking at all the risks posed to our financial system is not a partisan issue— just ask Chair Powell. It’s not some radical idea—just ask Citi and Morgan Stanley. We saw in 2008 what happens to people’s job opportunities and to their lifesavings—their home, their retirement accounts, their college saving—when we ignore big risks. Sarah Bloom Raskin will work to make sure our country doesn’t make the same mistake again. Dr. Lisa Cook and Dr. Philip Jefferson are the President’s nominees to serve as governors of the Federal Reserve Board. They are highly respected and experienced economists with sterling credentials. They understand how monetary policy can contribute to our economic growth and strengthen our economy for everyone. Dr. Cook currently serves as professor of economics and international relations at Michigan State University. She brings a wealth of research and international experience on monetary policy, banking, and financial crises. That includes serving on the Council of Economic Advisers during the Eurozone crisis and past work with several Federal Reserve Banks. She has done groundbreaking research on how disparities in our economy inhibit technological innovation and limit our overall economic growth. She knows the important role that workers and local communities play in our overall economic growth—from the rural South to the industrial Midwest. Dr. Cook has also led the American Economics Association Summer Training Program, which builds the pipeline for diverse young economists to ascend to institutions like the Fed. To give you a sense of her impact, a mayor from my home State, Mayor Babcock of Oak Harbor, wrote to me about her. He got to know Dr. Cook at one of those training programs, and he wrote, quote, ‘‘I know her to be kind, qualified, and to understand the struggles and opportunities faced by Midwest communities like mine, where we are burying the term ‘Rust Belt’ in pursuit of a bright future.’’ ‘‘Burying the term ‘Rust Belt.’ ’’ We need a whole lot more people in institutions like the Fed who understand how ignorant that term is, and who understand that economic growth only matters if it reaches places like Oak Harbor, Ohio. Dr. Lisa Cook will be that public servant. Dr. Jefferson is the Vice President for Academic Affairs, Dean of Faculty, and Paul B. Freeland Professor of Economics at Davidson College. He began his career as a Fed economist, and served as chair of the Economics Department at Swarthmore College. Dr. Jefferson literally wrote the book on poverty and economics. His research on poverty will bring a perspective to the Fed that we need as we emerge from the coronavirus crisis. Listen to what the Washington Post Editorial Board wrote. Sometimes the board leans conservative—think privatization of Medicare, the Iraq War, trade deals that outsource jobs—and sometimes they lean more progressive. But I think we all agree, hardly a bastion of radical left wing thought. Listen to what they wrote: President Biden’s latest nominees to the Federal Reserve, quote, ‘‘are ready to help lead the Fed and bolster its credibility. The Senate should move quickly to put them in place.’’ For the first time in almost a decade, we will have a full Board of Governors at the Federal Reserve, and one that reflects the country. We’ll have public servants who will not only steer us back on to the road to normalcy, but who reach for a stronger economy than before. The American people deserve a Fed that works for them. Our country codified the Fed’s dual mandate of price stability and full employment with the 1978 Full Employment and Balanced Growth Act—better known as the Humphrey Hawkins Act, and borne out of the civil rights movement. The law makes it clear that, quote, ‘‘Increasing job opportunities and full employment would greatly contribute to the elimination of discrimination based upon sex, age, race, color, religion, national origin, handicap, or other improper factors.’’ That is part of the Fed’s job. President Biden’s Fed nominees will ensure workers—all workers—and their families reap the benefits of the economic growth they create. And these nominees will fight for all the communities that have been left on their own, from women and 49 Black and Brown workers, to rural towns, to all the places too long derided as the ‘‘Rust Belt.’’ I look forward to supporting Governor Bloom Raskin and Dr. Cook and Dr. Jefferson—along with Chair Powell and Governor Brainard—and encourage all of my colleagues to do so as well. PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY Thank you, Mr. Chairman. Ms. Raskin, Professor Cook, and Professor Jefferson, welcome. We’re here today to consider three Fed nominees. But today’s hearing is not just about vetting them. It’s a referendum on the Fed’s independence. There are people on the left, including in the Biden administration, advocating that the Fed use its supervisory powers to resolve complex political issues, like what to do about global warming, social justice, and even education policy. These are important issues, but they’re wholly unrelated to the Fed’s limited statutory mandates and expertise. Addressing those kind of issues requires political decisions involving tradeoffs. In a democratic society, those tradeoffs must be made by elected representatives, who are accountable to the American people, not unelected central bankers. The question is not about the merits of specific policies, but rather who should decide if they should be put into place. Let’s take global warming. If we limit domestic oil and gas production, energy prices will rise. Americans will pay more at the pump to accomplish the stated goal of decreasing emissions. How much more is appropriate? If we move aggressively to limit energy production but other countries don’t, global warming won’t significantly slow. Should we do it anyway? How much reduction in global warming should we seek? Let me be clear: this isn’t about whether one believes addressing global warming is important, or any one person’s answer to these questions. The point is these are difficult choices, which must be made by accountable representatives through a transparent and deliberative legislative process. My concern about Fed overreach is not hypothetical. The Fed is already exceeding its mandates and engaging in political advocacy. For example, the Minneapolis Fed is actively lobbying to change Minnesota’s constitution—on the issue of K–12 education policy. Does anyone truly think such activity is within the Fed’s mandate? If activism by a supposedly independent central bank is accepted, the potential for abuse—by both parties—is limitless. Don’t accept my word about the politicization of the Fed. Ms. Raskin and Prof. Cook’s many past statements tell us exactly what they think the Fed should do. Let’s start with Ms. Raskin. She’s repeatedly, publicly, and forcefully advocated for using financial regulation—including the Fed—to allocate capital and debank energy companies. While other like-minded regulators have been careful to say their goal is simply to assess risk, Ms. Raskin has said the quiet part out loud. In a 2020 report from a progressive organization, Ms. Raskin urged financial regulators to adopt policies that will ‘‘allocate capital’’ away from energy companies. In a 2021 speech at the ‘‘Green Swan’’ conference, she proposed ‘‘portfolio limits or concentration limits’’ on banks’ lending to energy companies. And, in May 2020, at the height of the pandemic, she specifically called in a New York Times op-ed for excluding a single industry—the fossil energy sector, which she called a ‘‘dying industry’’— from the Fed’s emergency lending facilities. Ms. Raskin’s proposals would have devastating consequences not just for energy workers, but also consumers, who’d pay much more for energy. On what basis could she justify this idea that the Fed exercise these extraordinary powers? Ms. Raskin sees two categories of climate-related financial risks: physical and transition. Now the actual data shows that ‘‘physical risks’’—that is, severe weather events— don’t threaten financial stability. Economic damage from weather-related events as a percentage of GDP has actually trended down over the past 30 years, and we still haven’t found a single bank failure caused by any weather event, thus proving banks are perfectly capable of managing physical risk. We’re also told that banks need regulation that quantifies ‘‘transition risk’’ from changing consumer preferences. Bankers know how to manage changing consumer preferences better than regulators do. The real risk here is political, as Fed Chair Powell acknowledged last month. Unelected officials like Ms. Raskin want to misuse bank regulation to impose environmental policies that Congress has refused to enact. Ms. Raskin has repeatedly 50 and specifically advocated that the Fed allocate capital away from the fossil fuel industry as a way to combat climate change. She says the quiet part out loud. Now turning to Prof. Cook. The Administration cites her role as a director of the Chicago Fed as a main qualification—a position she held for only 2 weeks before being nominated. She has a Ph.D., but no academic work in monetary economics. And the few times she’s said anything about monetary policy, its cause for major concern. Despite unemployment below 4 percent and inflation above 7 percent, in our conversation on Tuesday Prof. Cook refused to endorse the Fed’s pulling back its easy money policy. But, keeping monetary policy loose is accelerating inflation that is rising faster than wage growth. High inflation is a tax that makes everyone poorer— but especially low-income workers. Also important is Prof. Cook’s extreme left-wing political advocacy. She has supported race-based reparations, promoted conspiracies about Georgia voter laws, and sought to cancel those who disagree with her views, such as publicly calling for the firing of an economist who dared to tweet that he opposed defunding the Chicago police. And after we highlighted these tweets for the public’s attention, yesterday, Prof. Cook blocked the Banking Committee Republican Twitter account. Apparently Prof. Cook realizes how inflammatory her partisan tweets are. The Fed is already suffering from a credibility problem because of its involvement in politics and departure from its statutorily proscribed role. I’m concerned that Prof. Cook will further politicize an institution that must remain apolitical. Prof. Jefferson, thank you for coming to my office on Tuesday. I appreciated our discussion and your decades of work on macroeconomic issues central to the Fed’s important work. Based on Prof. Jefferson’s academic credentials, written work, and our conversation, I believe Prof. Jefferson is well-suited to the position for which he has been nominated. My Democratic colleagues—you’ve spent the past several months talking about how passionately dedicated you are to democratic principles and values. Certainly one of those principles is that the unelected governors of America’s central bank shouldn’t be responsible for dealing with difficult issues like global warming, social justice, and education policy. This isn’t about the importance of those issues. It’s about keeping the Fed apolitical and independent and ensuring that elected, accountable representatives make difficult decisions. And if that doesn’t convince you, remember that one day the shoe will be on the other foot. PREPARED STATEMENT OF SARAH BLOOM RASKIN TO BE VICE CHAIRMAN FOR SUPERVISION AND A MEMBER OF THE BOARD GOVERNORS OF THE FEDERAL RESERVE SYSTEM OF FEBRUARY 3, 2022 Thank you, Chairman Brown, Ranking Member Toomey, and Members of the Committee for the opportunity to appear before you today. Thanks also to your exemplary staff, who provide essential support, something I know from serving this Committee as Banking Counsel. With me today is our daughter, Hannah Grace Raskin. Hannah is a real live banker, and we have animated conversations about banker-like topics such as what goes into the numerator for the Allowances for Loan Loss Reserves and what gets subtracted out of Net Interest Margins. Our other daughter, Tabitha, teaches middle school algebra; she would have been here but for the fact that today is the review day before the exam for slope and intercept equations. Our son Tommy, whom we lost in 2020, is with me always. He came into the world when I worked for this Committee. I remember where I was standing in these very offices in 1995 when he started kicking as I went into labor, and I remember returning to these halls to show my friends here my sparkling little boy. Boundless gratitude too to my beloved husband, Jamie, who provides bedrock strength and love to our family. As a child growing up in Illinois, my family made a weekly Saturday morning pilgrimage to the Bank of Homewood, where my mother would withdraw money for the week. From this experience, the importance of banks to the economic well-being of a community was never lost on me. As my brother and I eyed donuts in the lobby, my mom would direct us to get in line for the right bank teller: ‘‘This line,’’ she would say, ‘‘We want Shirley.’’ We would get weekly updates on Shirley’s children, their Little League games, bowling scores, and family camping trips. 51 In 2007, I was honored to become Maryland’s State bank commissioner, which enabled me to demonstrate my lifelong appreciation for community banking. Later, I was confirmed by the Senate to be a Governor on the Federal Reserve Board from 2010 to 2014 and Deputy Treasury Secretary from 2014 to 2017. I also worked in the private sector as a banking lawyer and general counsel. I am proud of my work at the Federal and State levels to champion the interests of consumers and community banks, while ensuring the resilience of our financial system, particularly in the areas of cybersecurity and appropriately tailored rules. These experiences helped me understand the importance of bank supervision to the ability of our financial system to work for all Americans. I also learned from the subprime mortgage crisis, which cost us tens of millions of jobs and homes, and trillions of dollars lost to our families, businesses, and communities in equity and savings. Like the crises before it, the subprime mortgage crisis showed how weak regulatory oversight and unattended problems can reverberate, rattle, and ravage our entire economy. I learned that—to be effective for all Americans—bank supervisors must make sure that the safety of banks and the resilience of our financial system are never compromised in favor of short-term political agendas or special interest groups. They must stay attentive to risks no matter where they come from: inside or outside the financial sector; well-identified asset bubbles or speculation; a set of threat actors that launch cyberattacks; or from nature and cataclysmic weather-related events. As created by Congress, the role of Vice Chair of Supervision requires consultation with other Governors of the Federal Reserve, the Fed’s expert staff, the banks themselves, and other experts about the extent to which financial institutions are identifying, analyzing and managing their risks. The role does not involve directing banks to make loans only to specific sectors, or to avoid making loans to particular sectors. And the role exists within the laws passed by Congress that govern the Federal Reserve and its responsibilities. I understand that anyone confirmed to this position must act not only with as much knowledge as possible but also with humility. Knowledge, especially about the future, can be imperfect. Finally, I also want to recognize the toll inflation exacts on working people who are concerned about how far their paychecks will go for essentials like food, housing, and transportation. It is an important task of the Federal Reserve to reduce inflation and one that must be a top priority while we continue to sustain our economic recovery. If confirmed, I look forward to meeting the considerable challenges and opportunities before us: the indispensable work of defending and safeguarding the financial sector, the Federal Reserve’s dual mandate, and the economic future of all Americans. Thank you. I welcome your questions. 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 TO BE A PREPARED STATEMENT OF LISA DENELL COOK MEMBER OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM FEBRUARY 3, 2022 Chairman Brown, Ranking Member Toomey, and other Members of the Committee, thank you very much for the opportunity to appear before you today. I am humbled and honored to have been nominated by President Biden to be a member of the Board of Governors of the Federal Reserve System. I earned my Ph.D. at Berkeley, served on the President’s Council of Economic Advisers, and have spent decades teaching, studying, and researching economic growth and monetary policies. The depth and breadth of my experience in both the public and private sectors qualify me to serve as a Federal Reserve Governor, and, should I be confirmed, I would be honored to work with my colleagues to help navigate this critical moment for our Nation’s economy and the global economy. In terms of priorities, I agree with Chair Powell that our most important task is tackling inflation. High inflation is a grave threat to a long, sustained expansion, which we know raises the standard of living for all Americans and leads to broadbased, shared prosperity. That is why I am committed to keeping inflation expectations well anchored. My approach to complex problems is to be guided by facts, data, and analysis and to work collaboratively. I have served in the Administrations of Presidents from both parties, and when I make decisions, I do so based on the facts and not politics. In this respect, I will follow the example of Paul Volcker, whom I greatly admire for his unwavering dedication to a nonpolitical and independent Federal Reserve. My convictions were shaped by my upbringing in Milledgeville, Georgia. It was the desegregating South, and both sides of my family were promoting nonviolent change alongside our family friend, the Rev. Dr. Martin Luther King, Jr. While my sisters, Pamela and Melanie, and I were integrating our schools and pools, my parents were integrating their places of work. My mother, Professor Mary Murray Cook, and my aunt, Professor Loretta Murray Braxton, integrated their universities and STEM (science, technology, engineering, and mathematics) departments by race and by gender, preparing students for a desegregating South that promised greater opportunity for all. My cousin Floyd McKissick, Sr., spoke at the March on Washington and integrated the University of North Carolina law school. My uncle, Dr. Samuel DuBois Cook, studied with Dr. King at Morehouse College, was the first African-American tenured professor at a southern university, and later was president of Dillard University. I want to thank Senators Warren, Kennedy, and Tillis, as well as the many other senators, who honored my uncle in a Senate resolution upon his death in 2017. The sense of discipline, hope, and mission instilled in me by my family has taken me from Spelman College to Oxford, the Hoover Institution, and Harvard, but I have never forgotten where I came from and the dedicated teachers who supported me. I chose to seek my current tenured position as a macroeconomist in the industrial Midwest in this same spirit of being close to how our economic decisions affect working families. Living in a manufacturing hub during the financial crisis has underscored the effect that deep recessions have on everyday lives. And that is one reason I have dedicated much of my career to preventing the next financial crisis. A strong and resilient financial system supports American families, businesses, and our economy. My research on economic growth has been informed by my interactions with families, businesses, policymakers, and financial institutions. I have extensive experience working for many types of banks, including serving on the board of a community development financial institution, or CDFI, in Grand Rapids. I am particularly proud that community banks were among those that elected me to serve on the board of the Federal Home Loan Bank of Indianapolis. I have also worked closely with the Federal Reserve over the course of my career, conducting research at Reserve Banks before and after receiving my doctorate, attending policy conferences, and serving on advisory panels and as a director of the Federal Reserve Bank of Chicago. There is still much to learn to make sure the Fed does its job even better. Our economy is constantly evolving. Learning to do better will require humility, perseverance, and diverse perspectives. Again, it is an honor to be considered for this position, and I look forward to working with Members of this Committee. If confirmed, I will faithfully support the congressionally mandated goals of stable prices and maximum employment, which Congress has entrusted to the Federal Reserve. Thank you. I look forward to your questions. 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 TO BE PREPARED STATEMENT OF PHILIP NATHAN JEFFERSON MEMBER OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM A FEBRUARY 3, 2022 Chairman Brown, Ranking Member Toomey, and Members of the Committee, thank you for the opportunity to appear before you today. I am honored to have been nominated by President Biden to serve as a member of the Board of Governors of the Federal Reserve System. If confirmed, I would draw upon my background and skillset to contribute positively to the well-being of the American people by helping the Federal Reserve to adhere to the dual mandate set for it by Congress: promotion of maximum employment and stable prices. As some of you may know, I was born and raised here in Washington, DC, in the Northeast section, just blocks away from Robert F. Kennedy stadium. The neighborhood is called Kingman Park, and in my youth, it was a place where the line between a future of success or struggle was thin. The Capitol is a mere 25 blocks from the row house where I grew up. My first job after graduation from college was here in Washington as a research assistant for the Board of Governors. Since that time, I have been fortunate to pursue a career that spanned a valuable combination of experiences both within and outside academia. I have served as a professor of economics, department chair, college dean, college vice president, president and director of various professional organizations focused on economics, a college trustee, a borough council member, and have held additional professional roles within the Federal Reserve System. In the leadership positions I have held, the essential qualities for success have included a spirit of collaboration, the capacity to compromise, and the ability to achieve consensus. Further, I am a Ph.D. economist with an unusual combination of specializations: macroeconomics and monetary economics, poverty and economic inequality, and applied econometrics. If confirmed, these specializations would enable me to analyze from multiple perspectives the complex issues that come before the Board. Today, the economy is facing two major challenges: the COVID–19 pandemic and inflation. The pandemic has disrupted the supply side of the economy and changed the composition of aggregate demand. The spike in inflation we are seeing today threatens to heighten expectations of future inflation. The Federal Reserve must remain attentive to this risk and ensure that inflation declines to levels consistent with its goals. The mandates set by Congress for the Federal Reserve have served the American people well. As we know from experience, the pursuit of maximum employment and stable prices fosters an economic environment characterized by a dynamic labor market, entrepreneurship, private saving and investment, and sustainable growth in consumption and production over the longer run. Importantly, the dual mandate provides a critical foundation for monetary policy amid our current challenges and those that lie ahead. The tools of monetary policy can be deployed with clear goals in mind. Adherence to these goals will ground inflation expectations appropriately so that policy itself does not encumber private economic decision making. Further, long-run inclusive prosperity requires that the Federal Reserve pay careful attention to the safety and soundness of banks and the stability of the financial system. Before closing, I wish to acknowledge the love and support of friends and family, especially my sons Nathan and Miles. Also, I wish to mention my late parents, Wade Jefferson, and Joan and Walter Coates, who worked so hard and gave so much, so that this improbable day could even be possible. Regardless of the outcome, they would have been so very proud of these proceedings. Thank you for the opportunity to appear before you today. It is a real honor. I look forward to and welcome your questions. 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 RESPONSES TO WRITTEN QUESTIONS FROM SARAH BLOOM RASKIN 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 RESPONSES TO WRITTEN QUESTIONS FROM LISA DENELL COOK 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 RESPONSES TO WRITTEN QUESTIONS FROM PHILIP NATHAN JEFFERSON 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD LETTERS SUBMITTED IN SUPPORT OF NOMINEES 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343 344 LETTERS SUBMITTED IN OPPOSITION TO NOMINEES 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359 360 361 362 363 364 365 366 367 368 369 370
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