FOR IMMEDIATE RELEASE
Thursday, February 3, 2022
Contact: Evelyn Swan at 202-618-6433 or eswan@bettermarkets.org
WASHINGTON, D.C.—Dennis Kelleher, Co-founder, President and Chief Executive Officer of Better Markets, issued the following statement following the Senate Banking Committee hearing today on President Biden’s nominations of Sarah Bloom Raskin, Lisa Cook and Philip Jefferson to serve on the Federal Reserve Board:
“There was dangerous rhetoric at today’s Senate Banking Committee hearing on the three nominees for the Federal Reserve Board that threatens the independence of the Federal Reserve and risks another financial crash. However, it didn’t come from the nominees, but from their critics and opponents.
“Critics of the nominees today were really attacking the Fed’s independence and legal mandates. The Fed is required by law to evaluate risks to banks’ safety and soundness and to financial stability and facilitate mitigation of those risks regardless of source or origin. That is supposed to also be done regardless of – indeed, despite – political preferences anyone may have, including very powerful Senators. That’s what it means for the Fed to be independent: it makes decisions on risk, no one else. That is the linchpin to safety and soundness as well as to preventing financial crashes.
“As was made clear at today’s hearing, Senators critical of the nominees want the Fed to create a special exemption for any risks arising from the fossil fuel industry, in effect insisting on a de facto prohibition on the Fed from even looking at risks arising from climate. That is nothing less than those Senators politicizing the Fed by picking winners and losers and carving out special treatment for their special interests.
“That not only seriously undermines the Fed’s independence, but it also increases the risk of a financial crash. Politically unregulated risks don’t go away; they get bigger and more dangerous until they explode. That is what happened when politicians in the 1990s prohibited the regulation of derivatives, which then materially contributed to causing, intensifying, and spreading the 2008 financial crash.
“No one should be able to tell the Fed what risks to evaluate or not. That’s dangerous, wrong, violates the law, and threatens the American people with another devastating financial crash.”
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
