Why are fossil fuel companies and Senate Republicans so afraid of Sarah Bloom Raskin?
The language reflects the “elimination of energy discrimination” bills supported by the American Legislative Exchange Council, or ALEC, spilling over into state legislatures across the country, demanding that pension funds divest from financial institutions that “boycott energy companies.” Fittingly, a coalition including many Republican state representatives who are support these “anti-ESG” (environmental, social and governance) efforts have weighed on Raskin’s appointment, too. A letter to the Banking Committee from 24 state treasurers, auditors, and financial officers is less low-key than the House entry, arguing against Raskin’s offer. “We oppose the radical banking and economic views of Ms. Raskin and are deeply concerned that she would use the supervisory authority as Vice President of Supervision of the Federal Reserve Bank to disrupt the private banking sector, reliability of energy supply and the US economy,” the group writes.
The driving force behind their anti-ESG measures is to protect the fossil fuel industry against all threats, even when it comes to terrible investments. Financial institutions that divest or simply choose not to invest in carbon-intensive businesses and projects, they say, is a form of discrimination.
This could all lead to a contentious hearing, as the mostly Republican senators try to portray their extractive sector campaign donors – now raking in huge profits and engaging in tens of billions of dollars in stock buybacks – as the victims of woke ESG social justice warriors trying to undo them with vaguely worded net pledges. These social justice warriors include everyone from Fed veterans like Raskin to BlackRock CEO Larry Fink, whom some Republicans no longer like for embracing ESG rhetoric. (Joe Manchin, a member of the Democratic Senate Banking Committee, the Senate’s first recipient of oil and gas industry donations and its only member to receive half a million dollars a year from his family’s coal business, could issue a decisive vote. But on Tuesday he praised Raskin as “extremely qualified.”)
The Fed is responsible for ensuring the stability of the financial system as well as full employment, and its policies reverberate well beyond US borders, due to the dollar’s status as the world’s reserve currency. Given the estimated $334 billion that climate disasters cost last year and 1.1 degrees Celsius of global warming, financial regulators can either consider the threat posed by climate change and stranded assets of the fossil fuel industry, or ignore them and see what happens…as several senators are likely to argue on Thursday. The main threat identified by the right is therefore that Sarah Bloom Raskin could in fact be doing her job.