What I expect from President Biden’s Fed nominees

The Federal Reserve Board of Governors has the extraordinary responsibility to safeguard the financial system of the United States. The U.S. Senate knows this, and we take seriously our responsibility to confirm nominees to serve at the Federal Reserve.

As a member of the Senate Banking Committee, I recently voted to support the nominations of Jay Powell, Lael Brainard and Philip Jefferson to the board of governors. I believe they are smart, qualified and capable, and look forward to working with each of them.

Unfortunately, other recent Fed actions and nominations that have occurred under President Biden’s watch cause me to question whether the Fed is losing sight of its core mission in our system of government. In particular, personal financial gain and political causes have crept into the Fed in the eyes of some, which reflects poorly on the institution as a whole — especially given its enormous independence and power over our daily lives.

First, there is the Fed’s decision to consistently ignore letters and oversight from Senate Banking Committee Ranking Member Pat Toomey, who has rightly expressed concern over the Fed’s mission creep into issues like global warming and social justice.

These issues are wholly outside the mission of the Fed. Lest readers question that mission, it is “to foster the stability, integrity, and efficiency of the nation’s monetary, financial, and payment systems so as to promote optimal macroeconomic performance.”

This is a dispassionate, apolitical vision that requires the Fed to follow the law and serve the American people, not to adopt disputed claims about the impact of climate change on financial institutions, or directly or indirectly reduce capital flows into the energy industry, especially since Congress has refused to do so.

While some regional Federal Reserve banks, and not the board of governors, are responsible for these misadventures into the political arena, the board retains oversight of the reserve banks, and must ensure they too are following the law and are not unknowingly weakening the independence of the entire Federal Reserve System in the eyes of Congress and the public. The reserve banks, and senior officials at the board of governors, are also not insulated from congressional oversight.

Just last year, two reserve bank presidents resigned after they were discovered actively trading stocks during the pandemic, raising questions about their use of insider information and prompting a wholesale review of the Fed’s ethics policies.

My home state of Wyoming has also suffered from a Federal Reserve that has consistently failed to follow the law and has frustrated responsible innovation. Wyoming’s special-purpose depository institutions are the first attempt to responsibly integrate digital assets into the U.S. banking system and are entitled to access to the Federal Reserve’s payment system as a matter of law. Even though Congress has imposed a one-year deadline on all Fed applications, nearly two years later Wyoming institutions are still awaiting approval to access the payment system.

To top it off, President Biden recently nominated Sarah Bloom Raskin to serve at the Fed. Raskin had previously made troubling statements about using the Fed to directly or indirectly reduce access to capital for the oil and gas industry. I also had serious questions about how she profited from revolving-door, privileged access to the Fed and Treasury after she left previous positions there.

These kinds of actions must stop. The American people give their government incredible power, and in return they expect officials to act in good faith. With great power comes great responsibility.

The Fed has increasingly appeared disinterested in doing its important, clearly defined job and more interested in doing mine.

As an elected official, it is my job to consider the concerns of my constituents and turn them into policy. It is the Fed’s job to faithfully execute the policies that my colleagues and I enact within the Fed’s narrowly enumerated statutory powers.

This is all I want from President Biden’s nominees. I want a commitment to fulfill the Fed’s mission, not a partisan interpretation of what it could or should be. I want nominees whose past shows a commitment to serving others, not themselves, and a strong command of economics and financial regulation.

The Fed has not been tasked with creating a managed economy, but protecting a free one. As a member of the Senate Banking Committee, I have been tasked with making sure the Fed sticks to this mission. All I ask is that future nominees to the Fed understand this responsibility, and will commit to it.