Biden to nominate Sarah Bloom Raskin as vice chair for supervision at Fed
Sarah Bloom Raskin was appointed Deputy Treasury Secretary at the Treasury Department of Washington on October 2, 2014.
Yuri Gripas | Reuters
President Joe BidenAccording to someone familiar with the matter, Sarah Bloom Raskin will be nominated to the Federal Reserve’s vice chair for supervision. This is arguably the most influential banking regulator in the country.
According to the source, Biden will nominate Lisa Cook, Philip Jefferson, to serve as Federal Reserve Governors. The person requested anonymity to discuss private White House decisions.
The Senate Banking Committee will question each nominee in coming weeks. This congressional committee is responsible for vetting Presidential appointments to central banks.
The Fed Chair nominee was heard by the committee Tuesday. Jerome Powellwho? Biden chose to nominate to a second term. A similar hearing was held for Fed Governor Lael BrainardOn Thursday, Biden selected Biden to become the next vice-chair of the central bank.
Randal Quarles was the Fed’s former Vice Chair of Supervision. He played an important role in the reduction in capital requirements for banks in the United States with assets less than $700billion and the relaxation of the Volcker Rule’s audit rules regarding trades between JPMorgan Chase, Goldman Sachs or other investment banks.
Fed officials praising the move claim that the sector is capitalized well and does not need some of the restrictive measures taken in response to the crisis.
Nominations for Fed Chair come at a difficult time. The Fed is currently trying to end its easy money policies, despite recovering employment and the highest year-over–year inflation levels since 1982.
Normal economic activity allows the Fed to adjust its short-term interest rate in order to stabilize prices and maximize employment.
The Fed can lower borrowing costs when it wants to increase the economy’s heat. This is done to boost the housing market as well as other economic activities. However, if the Fed is worried about an unruly inflation or an overheating economy, they can increase borrowing costs.
The central bank has the ability to purchase large quantities of bonds in times of financial emergency. This allows it to lower borrowing costs and increase liquidity for financial markets. With the arrival of Covid-19, the central bank did this in 2020. This was a step that helped to calm traders and provide liquidity for companies.
The price of bonds rises, and bond yields decrease. This is why those buying forced rates to fall. But ending those types of emergency-era liquidity measures — and the prospect of higher rates — can have the opposite effect on markets.
It release of the Fed’s latest meeting minutesAn earlier January report that showed several Wall Street officials were in favor of reducing the balance sheet, and increasing rates, caused a Wall Street sell-off.