Biden Nominee Reaps the Financial Rewards of Being 'Connected'
Who among us hasn’t made $1.5 million for sitting on an advisory board for two years? Not you? Come to think of it, me neither. Such money comes only to the well connected.
And “connected” is a good word to use in regard to Sarah Bloom Raskin, nominated last month by President Joe Biden to be Vice Chair for Supervision at the Federal Reserve System. Previously, from 2010 to 2014, she served as a Governor of the Fed, and then, from 2014 to 2017, she worked as Barack Obama’s Deputy Secretary of the Treasury.
After that posting, Raskin did a stint as an adviser to the Reserve Trust. That’s a government-sounding entity — sort of sounds like the Federal Reserve, in fact — and yet it’s a completely private for-profit firm. And here’s something interesting: Reserve Trust bills itself as “the first fintech trust company with a Federal Reserve master account.”
Hmm. There’s a lot to unpack there. First off, “fintech” is that new category of digital finance, notable for its crypto-opaque nature. Second, the Federal Reserve’s own website tells us that “master account” is what it sounds like: a coveted category.
To review: Reserve Trust was founded in 2016. The following year, Raskin, fresh from her time in the high councils of state, joined its advisory board. In 2018, Reserve Trust received its master account — and Raskin admits that she helped the company get it. Then in 2019, she left the advisory board, and the following year, sold her 200,000 shares of the company for $1.5 million. Nice work, if you’re connected enough to get it.
Also of interest: Her husband is Rep. Jamie Raskin (D-MD), and he figures in this story because as a Member of Congress, he is required to disclose such all-in-the-family transactions. He did disclose, but it took him eight months, and so now he’s the target of an ethics complaint filed by Tom Jones, founder of the American Accountability Foundation, who told Fox Business, “Sarah and Jamie Raskin are career politicians who have used the system to enrich themselves, and it is time that someone holds them accountable. If House rules are going to mean anything, the House Ethics Committee needs to open an investigation and sanction Jamie Raskin for hiding this shady stock deal from the public.”
In the meantime, Ms. Raskin seeks another spin through the Washington, DC, revolving door, striving for that high post at the Fed. For an update, let’s look to The Hill's account of Raskin’s February 3 hearing before the Senate Banking Committee. In particular, we can note the caustic comments from Sen. Cynthia Lummis (R-WY): “You leave Treasury, you serve on the board of Reserve Trust for two 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 state-chartered trust company in the country to get one, and you walk away with $1.5 million.”
Lummis continued: “Something doesn’t smell right with the way this played out.” The Wyoming lawmaker concluded, “My state’s companies, my constituents, have been stonewalled, have been slow-walked and have not been able to get approval even though they’ve been working with the Fed for two-and-a-half years.”
Some will say that Raskin’s story is, in a D.C. context, unremarkable, and that her capital gains are no big deal. Let’s face it: The Beltway is home to many folks who came to do good and ended up doing well.
Yet here’s something more troubling about Raskin, affluent suburban liberal that she is. You see, Ms. Raskin has taken a zealous position on climate change. Okay for a Democrat, that’s not such big news, and yet Raskin has added a financialist twist, in keeping with her once and perhaps future work as a financial regulator: She has written, many times in the last few years, that the Fed should use its regulatory power to restrict financing for fossil-fuel companies. That’s an indirect, but likely effective, way of crushing Exxon and all the rest.
If Raskin is confirmed as Vice Chair for Supervision, she will be empowered, according to the statute, to “develop policy recommendations for the Board regarding supervision and regulation” of depository institutions “and shall oversee the supervision and regulation of such firms.”
In other words, Vice Chair Raskin would have vast power over banks and their assets, which total nearly $23 trillion. Congressional Democrats may be mostly stymied in their efforts to write green legislation, and yet Raskin could come to their rescue by writing green regulation.
To put that another way, Raskin at the Fed would be a harmonic convergence of two contemporary neoliberal tendencies: financialism and environmentalism. Given her wealth, Raskin is not credible as a class warrior, and yet she could be a forceful eco-warrior.
Unsurprisingly, energy-state Republicans are sounding the alarm. Sen. Bill Cassidy of Louisiana thundered that Raskin has “made clear she wishes to use the power of the central bank to effectively destroy the U.S. oil and gas industry.”
So will Raskin make it to the Fed? There’s plenty of opposition: Last month 24 Treasurers, Auditors and Financial Officers, all Republicans, from 21 states signed a joint letter opposing Raskin. One of those officials, West State Treasurer Riley Moore, declared, “President Biden knows he can’t shove his Green New Deal and Build Back Better social agenda through Congress, so he’s trying to push it through in other ways.” The New York Times sighed that she has only a “narrow path to confirmation.”
But whatever happens to her in the Senate, Raskin will continue to be connected, and so she will continue to do well. After all, many more fintech companies need master accounts.
James P. Pinkerton worked in the White Houses of Presidents Ronald Reagan and George H.W. Bush.
