Manchin undecided on Biden Fed nominees, adding to uncertainty on confirmation

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Sen. Joe Manchin remains undecided on whether to support President Biden's nominees for the Federal Reserve, including Sarah Bloom Raskin, the controversial pick for a top regulatory post at the central bank. 

The West Virginia Democrat – who has been a fierce critic of the Federal Reserve's monetary policy amid the highest inflation in 40 years – told Bloomberg News that he is still reviewing the candidates.

"We had a conversation, and we will have more conversations," Manchin said of Raskin, whom he met with earlier this week. "I made no decisions on anybody."

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Manchin serves as a critical vote in the 50-50 Senate – particularly for Raskin, who is facing fierce and united pushback from Republicans. 

"We’re just basically looking and reviewing everything and talking to my good friends here about all the different concerns people have," he said of the GOP opposition to Raskin.

Republicans, led by Sen. Pat Toomey of Pennsylvania, have skewered Raskin because of her past remarks on climate regulations, but boycotted a key vote on her nomination in the Senate Banking Committee earlier this week because of her ties to a Colorado-based fintech company that received a Federal Reserve master account while she served on its board. 

Sen. Joe Manchin, D-W.Va. speaks to reporters before a caucus meeting with fellow Senate Democrats on Capitol Hill Jan. 18, 2022 in Washington, D.C.  (Drew Angerer/Getty Images / Getty Images)

"Important questions about Ms. Raskin’s use of the ‘revolving door’ remain unanswered largely because of her repeated disingenuousness with the Committee," Toomey said in a statement on Tuesday.

Reserve Trust is the only fintech to hold a Fed master account. 

Access to Federal Reserve services is sought after by many fintechs and other nontraditional financial services companies, because there are a number of benefits, including the ability to borrow from the Fed's discount window and to earn interest from deposits at the central bank. Without a master account, nonbank financial institutions must partner with banks insured by the Federal Deposit Insurance Corp. in order to tap those services.

Reserve Trust had its master account application denied in June 2017; one year later, the application was approved. Toomey has noted that Raskin phoned Kansas City Fed President Esther George to advocate for the fintech company. 

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The Kansas City Fed claims that its reversal in 2018 was not the result of Raskin’s call, but rather that of Reserve Trust's changed business model "and the Colorado Division of Banking reinterpreted the state’s law in a manner that meant RTC met the definition of a depository institution," the Fed bank said last week.

Republicans, who say they want more time to vet Raskin, do not suggest that Raskin’s actions were illegal. Rather, they consider it an example of the "revolving door" between politics and corporate interests in which former government officials use their connections and clout in government to later lobby on behalf of businesses for a payout.

Sarah Bloom Raskin, nominee to be vice chairman for supervision and a member of the Federal Reserve Board of Governors, speaks before a Senate Banking, Housing and Urban Affairs Committee confirmation hearing on Capitol Hill on Feb. 3, 2022 in Washin (Ken Cedeno-Pool/Getty Images / Getty Images)

As vice chair for supervision, Raskin – a Duke University law professor who has held high-level jobs at both the Treasury Department and the Fed – would oversee annual stress tests that review bank safety and liquidity. Her nomination has been welcomed by progressive senators and advocacy groups, who think she will take a tougher stance against Wall Street than her predecessor, Randal Quarles, a Trump nominee who stepped down in late December. 

Raskin served on the Fed's board from 2010 to 2014 and was tapped by former President Obama to serve as assistant Treasury secretary. 

Dennis Gingold, co-founder and former chairman of the Reserve Trust company, said in a statement to Bloomberg News last week that Raskin had "no role whatsoever" in appealing the Kansas City Fed’s initial denial of the firm’s request for a master account. He added that Raskin’s "conduct was appropriate, ethical and correct in every respect."

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Banking Chair Sherrod Brown, D-Ohio, has refused to separate Raskin’s nomination from Biden’s other Federal Reserve picks, including the renomination of Jerome Powell as chair. The White House has indicated that it does not plan to withdraw Raskin's nomination.

"Sarah Bloom Raskin is one of the most qualified people to ever be nominated to serve on the Board of Governors of the Federal Reserve," the White House said in a statement. "Despite her qualifications, Senators Pat Toomey and Cynthia Lummis over the last several weeks have lobbed unfounded and unfair attacks at Raskin related to her time on the Board of Directors of Reserve Trust."

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