Will Sarah Bloom Raskin, who is set to be confirmed as the country’s top banking supervisor, implement a bitcoin bias in Federal Reserve regulation?
Sarah Bloom Raskin, a progressive darling, testified in Congress earlier this month before the Senate Banking Committee about her confirmation as the country’s top banking supervisor. The vote will take place in the United States Senate tomorrow. The highlights of the testimony are listed below.
Raskin has been chosen to serve as the Federal Reserve’s Board of Governors’ vice chair and head of supervision. This is a relatively new position at the Fed, established by Congress in the aftermath of the Great Financial Crisis in 2010. The head of supervision establishes rules for banks’ required capital levels and balance-sheet liquidity and ensures that the rules are followed. It is also an important position for the development of new bitcoin regulations that may apply to US banks.
This nomination indicates that the administration likely favours tighter financial regulation and seeks someone who can use the Fed’s powers to advance specific political initiatives.
AN EXTREMELY CONTROVERSIAL SELECTION
Raskin is no stranger to high-level positions in Washington, but she has never faced any opposition to her previous appointments, demonstrating that the Beltway is changing. This time, she may face a close vote, but she is expected to be confirmed.
Raskin served as the deputy Treasury Secretary during President Obama’s second term, from 2014 until the end of his term in January 2017. She was a governor of the Federal Reserve and a member of the Federal Open Market Committee prior to this position at the US Treasury (FOMC).
Senator Pat Toomey of Pennsylvania summed up the controversy surrounding her appointment succinctly, saying, “I have serious concerns that she would abuse the Fed’s narrow statutory mandates on monetary policy and banking supervision to have the central bank actively engaged in capital allocation.” Such actions would not only jeopardise the Fed’s independence and effectiveness, but they would also stifle economic growth.”
“Ms. Raskin has been critical of the Federal Reserve for allowing oil and gas companies to access the emergency 13(3) facilities during the COVID-19 pandemic,” the US Chamber of Commerce wrote in an unusually open letter in opposition to Raskin’s appointment. In her writings and public comments, she has also advocated for federal regulators to shift financing away from the fossil fuel industry.”
Fear mongering in Congress has failed to move the progressive climate agenda forward. Perhaps a new strategy is being developed to “influence” banks’ participation in selective credit access by leveraging the Fed’s power over banking regulations through unelected bureaucrats.
In March 2020, Raskin told lawmakers, “If we ignore climate change, we effectively destroy the economy.”
This sentiment echoes the European Central Bank’s and Bank of England’s globalist Davos talking points, which frequently use false equivalence between climate risks and systemic risks. In a different light, issues such as climate change are precisely what the market is best at adapting to, whereas inflexible and draconian regulations will render the market incapable of adapting to even minor changes. Many members of Congress are concerned that Raskin will not strictly adhere to the Fed’s dual mandate, allowing it to influence capital allocation and indirectly pick winners and losers.
RASKIN’S OPINION ON BITCOIN
Raskin’s stance on central bank digital currencies (CBDCs) and bitcoin in particular is murkier. She has been more concerned with “cyber” threats such as hacking. We can, however, assume that her views on stablecoins, bitcoin, and CBDCs are similar to those of her friend and vocal bitcoin opponent Senator Elizabeth Warren, as well as other European globalist central bankers.
Raskin’s husband, Jamie Raskin, is a progressive U.S. Representative from Maryland who recently endorsed Warren for reelection, has sponsored and written numerous progressive bills, and oversaw President Trump’s second impeachment hearing (conducted after Trump had left office). This history, and others, show that this is a partisan family.
Sarah Raskin’s views would be diametrically opposed to those of Fed Chair Jerome Powell on CBDCs, stablecoins, and bitcoin regulation. As head of supervision, she would have influence over Federal Reserve functions, but it is unclear whether this will be enough to overcome the Federal Reserve’s strict non-political stance under Powell.
It should also be noted that Raskin, as vice chair, would be a candidate for Federal Reserve chairman in four years. This has the potential to transform the Federal Reserve into a much more political institution. Hopefully, bitcoin will have grown too large by then to warrant a fight.
THE POTENTIAL EFFECT OF RASKIN ON BITCOIN
Raskin’s climate activism in the United States is obviously significant to the Bitcoin industry. Raskin’s progressive colleagues have spread misinformation about the environmental impact of bitcoin mining but have been unable to convert it into actual legislation. In fact, bitcoin is improving the ability of energy grids and energy companies to deal with extreme market events.
Randal Quarles, the man Raskin is nominated to replace, gave a speech in May 2021 in which he demonstrated an unusually strong understanding of the complexities and dangers of CBDCs, as well as the uniqueness of bitcoin. At the Federal Reserve, he was a bulwark against much of the globalist CBDC agenda. Replacing him with someone who holds opposing views could significantly shift the Fed’s balance.
Raskin appears likely to pursue Bitcoin through banking regulations. That wouldn’t be such a bad thing. If she turns it into a crusade, bitcoin will rise in the global monetary conversation, opening the Overton window.
HIGHLIGHTS OF THE RASKIN TESTIMONY
Senator Toomey is holding Raskin’s feet to the fire in the Congressional testimony beginning at 1:03:30. Toomey uses her own words when she says that the Federal Reserve should “influence” banks’ capital-allocation decisions. Her responses to his questions were evasive, repeating her belief that the Fed should not and cannot make capital allocation decisions. That sidestepped the question.
Another entertaining exchange occurs at the 1:33:20 mark, with Senator John Kennedy of Louisiana deploying his trademark style. Her responses and body language were obnoxious and conceited. She stated once more that the Fed should not pick winners or losers, but she did not state that the Fed should not “influence” banks’ capital allocation decisions.
The real fireworks began at 1:55:50, when Senator Cynthia Lummis of Wyoming, a Bitcoin supporter, took the microphone and interrogated Raskin about Federal Reserve master account access and her possible inappropriate connection to the one and only fintech company with a master account, which received that master account while Raskin was on its board in 2018.
Lummis presented convincing circumstantial evidence that Raskin worked at the Fed from 2010 to 2014, and then at the Treasury from 2014 to 2017. After leaving government, she joined the board of the Reserve Trust in Colorado, which had been denied a master account in 2017, but was granted one after Raskin made a call to the St. Louis Federal Reserve on its behalf.
Again, it’s worth noting that it’s the only non-bank to receive the honour, despite the fact that dozens in Lummis’ home state of Wyoming have failed to make headway in the last two and a half years. Raskin left the board a year after the master account was secured, having been bought out for $1.5 million. Drop the mic.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
