‘She Intended Not to Ignore Things Related to Climate, as There Is Pressure to Do’

https://fair.org/home/she-intended-not-to-ignore-things-related-to-climate-as-there-is-pressure-to-do/


March 23, 2022


CounterSpin interview with David Arkush on Fed climate veto
Janine Jackson



Janine Jackson interviewed Public Citizen’s David Arkush about fossil fuels’ Federal Reserve veto for the March 18, 2022, episode of CounterSpin. This is a lightly edited transcript.



Janine Jackson: The disjuncture between what really day-to-day matters in the lives of people around the country—food, shelter, work you can live on—and what elected officials do is the stuff of political science.

We all know that the connection isn’t direct. People want healthcare, for instance. When they have to choose between their medicine and keeping the lights on, nobody is saying, “Yay, this is a choice I made that redounds overall to my benefit.”

But when it comes to media coverage, people and their needs and their problems often get subsumed into an abstract story about economic interests and industry and government and blah, blah, blah.

Journalism could provide a different connection between human needs and policy decisions, that might spur action rather than frustration. And it seems as though a failure to connect those dots is part of why a candidate for a position at the Federal Reserve, Sarah Bloom Raskin, had her nomination derailed because her record indicated that she recognized that climate disruption is real, and will have economic impacts.

So what happened here is the sausage is being made, and there’s a reason that the joke is that you don’t want to see it. But we have to see it if we want to be the democracy of, by and for the people we claim we want to be.

David Arkush is the managing director of Public Citizen’s climate program, and a fellow at the Roosevelt Institute. He joins us now by phone from Washington, DC. Welcome to CounterSpin, David Arkush.

David Arkush: Thanks, Janine. Thanks for having me on.


Sarah Bloom Raskin (cc photo: New America)

JJ: Let’s start at the center here. Sarah Bloom Raskin was up for Federal Reserve vice chair for supervision. She was confirmed by the White House, obviously, but by others as well. So what happened?

DA: That’s a great question. And you know, your introduction had me thinking, there’s one thing worse than seeing how the sausage gets made, and that is seeing it fail to be made up close.

This is a job—I’ll start with maybe a little background on what this role is. So the position of vice chair for supervision at the Federal Reserve was created after the financial crisis of 2008. When Congress passed the big bill, the Dodd/Frank Wall Street Reform Act, one of the pieces in it was creating this position at the Fed, so that there would be a high-up official at the Fed monitoring the safety of banks and monitoring the stability of the financial system, and looking out, looking at the horizon for emerging risks, and figuring out what to do about it.

Sarah Bloom Raskin—it is hard to think of a person who is better suited to that job. She’s the most qualified person in the country that I know of by far. She is a former state bank regulator. She was the supervisor of banks in Maryland and the top financial regulator in Maryland. She has already been on the board of the Federal Reserve, which, this vice chair for supervision is one of the governors on the board; she’s already been one. And she was the No. 2 person at the Treasury. So she has high-level experience.

At Treasury, she led work on cybersecurity risks to finance, so she’s actually also the nation’s leading expert on cybersecurity threats to financial institutions and to financial stability, something that would squarely be within her jurisdiction at the Federal Reserve, and something that is a really heightened concern right now, given the war between Russia and Ukraine. We are actually facing heightened cyber threats on critical infrastructure in this country, including banks and the financial system. So it’s really hard to imagine somebody who’s more qualified.

Now, one of the things that somebody who is that qualified and that expert thinks about, in the context of making sure that we have a sound economy and a sound financial system right now, is climate. It is impossible to ignore that climate harms are imposing really severe costs on a lot of sectors, and a lot of whole states, and a lot of geographies. There are insurers who are pulling out of insuring homes in large regions of California. These things have major economic impacts, and it’s also hard to ignore that there are a lot of climate-related risks to financial institutions and to financial stability.

And that is basically a consensus view among most financial regulators these days. And Sarah Bloom Raskin also agrees with that view, and was very clear that she intended not to ignore things that were related to climate, as there is often pressure to do in the United States, because of our bizarre politics and the power of the fossil fuel industry, but that she would look at those risks the same way she would look at any others, and take them on if need be, in regard to how they affect banks and how they affect finance.


David Arkush: “Oil and gas has, for a long time, pressured financial regulators, pressured bank regulators, to adopt essentially biased rules.”

JJ: Which businesses and banks should want, right? I mean, they’re reality-based organizations, as we understand them to be. So what was it about what she said, matter-of-factly, about climate disruption and its impact that was the problem?

DA: This is what’s surprising and unusual about this situation. Sarah Bloom Raskin, in addition to all the other things I have said, has already been confirmed twice by the US Senate—she wouldn’t have been on the Fed board and she wouldn’t have been the No. 2 at Treasury if she hadn’t been—twice confirmed unanimously. And this time around, she also had broad bipartisan support. She’s supported by consumer groups, by civil rights groups, by unions, by many businesses, and by banks—by big banks and small banks. It’s a really uncommon thing to find somebody who virtually everybody agrees is actually extremely expert, competent and reasonable.

There was one major group that does not agree, and that is the oil and gas industry. And not even the whole oil and gas industry. It’s interesting, having seen this fight up close: The large oil companies didn’t bother. It was small oil and gas companies who were opposed.

And it’s not hard to figure out why. If you pay attention to these issues, a lot of the smaller oil and gas companies are in pretty shaky financial condition. Some of them have never been profitable, over the 10- or 15-year history of the company. And oil and gas markets are really volatile, everybody knows this; prices go up, prices go down; and it’s really hard for them to get loans, in part because a combination of how, basically, the companies are just really risky, and all the financial institutions know it, and they have trouble getting bank loans.

And so, oil and gas has, for a long time, pressured financial regulators, pressured bank regulators, to adopt essentially biased rules that either give them, directly, special bailouts or favors, or pressure banks to lend to companies that the banks think are too risky.

And one thing that was clear about Sarah Bloom Raskin was she was not going to do that. She was going to take a measured, serious, expert approach. And she’s well within the mainstream of what any honest and competent regulator should and would do, and frankly, most do, particularly on the one side of the aisle here.

But she had said some things about recognizing the threats from climate risks to financing to banks, and her opponents just seized on that, and I think we all know what often happens in US politics if you start painting somebody as a climate radical. She very quickly lost, in the US Senate, the support of basically every Republican and Sen. Joe Manchin from West Virginia. Ultimately, that was the end of her nomination, basically on the basis of her having viewpoints that are completely mainstream and reasonable. The chair of the Fed, who is a Republican, Chair Powell, agrees with and is about to sail through his confirmation. But in her case, they were used basically to smear her and treat her like she was some kind of radical.


Joe Manchin, arguably the single biggest obstacle to Congressional action on climate, whose deep conflicts of interest rarely interest corporate journalists (FAIR.org, 7/27/21)

JJ: Let me just ask you, finally, for your thoughts about media coverage, because when I looked at the coverage, I saw a reference to Bloom Raskin as “embattled.” And when you hear that word, or that kind of language, it makes it sound as though, you know, the jury was out, it was kind of 50/50, and she was on the losing side. What you’re telling me is, there was a whole lot of support and understanding, and then there was a faction that was able to whipsaw the rest. So if people are reading journalism, media coverage about this, and they want to really understand what happened, maybe “embattled” isn’t going to really tell them the story in the way that they should understand it.

So I would just ask you, finally, what would you like to see journalists doing more of or less of in terms of, not just this nomination, but in terms of the relationship between climate disruption and financial regulation?

DA: Well, that’s interesting. It is a big topic. I think that people do need to hear more about it and understand more about it. It couldn’t be more obvious; again, it’s very quickly becoming totally uniform among financial regulators to be taking it seriously, and lots of them are acting on the issue. And, frankly, a lot of the private sector is, a lot of the big banks are, a lot of the big asset managers are.

I think the coverage has been improving. Frankly, it’s a new area; a lot of people haven’t heard about the idea that there’s a connection between climate change and finance, although the moment you start talking to people about it, it’s obvious that it’s right, and there is, and that we ought to be thinking about it. And so it’s catching on very quickly.

But I think, yeah, increased awareness of that, increased awareness of the seriousness of the risks and what needs to be done. And that’s around the issue in general.

And then I think, in terms of this type of political fight, I started thinking toward the end of it that the US Senate is such a strange institution. And it’s so undemocratic. In a society that has such a long and proud tradition of democracy in so many ways, that is not one of them. And almost everything that happens there needs to be painstakingly contextualized as happening in this sort of bizarro alternate reality.

There’s a real world in which someone like Sarah Bloom Raskin is supported by basically everybody, including the banks that she’s going to regulate, and including consumer advocates and civil rights groups and unions; and then there’s the bizarro world of the US Senate, where the representation does not match the population of the United States, what they do does not match public opinion in the United States, and they operate under bizarre rules.

And, yeah, what happens there, it’s like a parallel universe. I think sometimes things that happen there get treated as if they’re real world things, or that they reflect real opinions, or that they reflect where the American people are. And I think that does some real harm, because it’s actually important for us to understand how that institution actually works, and frankly, in my view, how broken it is, and how much we need to be taking on that issue as well.

JJ: We’ve been speaking with David Arkush; he’s managing director of Public Citizen’s climate program. They’re online at Citizen.org. David Arkush, thank you so much for joining us this week on CounterSpin.

DA: Thank you, Janine.