Raskin Faces Senate Questions Over Views on Climate Change, Regulations

Republican senators at the hearing said her remarks appeared to be at odds with her past statements. They cited a May 2020 New York Times opinion article, in which Ms. Raskin was critical of broad-based emergency-lending backstops enacted by the Treasury Department and the Fed to assist businesses during the pandemic, because she believed they should have taken steps to prevent lending to oil-and-gas concerns.

“The decisions the Fed makes on our behalf should build toward a stronger economy with more jobs in innovative industries—not prop up and enrich dying ones,” she wrote in the 2020 article.

Sen. Pat Toomey, of Pennsylvania, the top Republican on the committee, called her statements at the hearing “one of the most remarkable cases of confirmation conversion I have ever seen.”

Ms. Raskin said her views on regulators’ role in addressing climate issues haven’t changed. She said the 2020 article was written about the way the government set up its emergency-lending programs. The article “did not have to do with the context of supervision and regulation,” she said.

Mr. Biden picked Ms. Raskin to serve as the Fed’s vice chairwoman for supervision. She testified at the hearing along with two economists nominated for other Fed board posts: Lisa Cook, a professor of economics and international relations at Michigan State University, and Philip Jefferson, a professor and administrator at Davidson College in North Carolina.

Mr. Biden has also nominated Fed Chairman Jerome Powell for a second term and Fed governor Lael Brainard to become Fed vice chairwoman. If all five of Mr. Biden’s nominees win Senate confirmation, they would hold most of the seats on the seven-member Fed board.

Republican opposition to the nominees could impede their confirmation in the closely divided Senate. Mr. Biden needs either the support of all Democrats to approve them, or support from some Republicans to overcome holdouts from his own party. Meanwhile, Sen. Ben Ray Luján (D., N.M.) is expected to miss four to six weeks because of a stroke, leaving Democrats short of a crucial vote.

At Thursday’s hearing, the nominees told lawmakers that the Fed must make it a priority to tackle high inflation. “The spike in inflation we are seeing today threatens heightened expectations of future inflation,” Mr. Jefferson said. “The Federal Reserve must remain attentive to this risk and ensure that inflation declines to levels consistent with its goals.”

Asked about the Fed officials’ recent signals that they would begin steadily raising interest rates in mid-March to combat price pressures, Dr. Cook said she agrees with the Fed’s path right now, but added that she would want to analyze data closer to any decision, should she be confirmed.

Some Republicans suggested at the hearing that Dr. Cook lacked sufficient experience in macroeconomics and monetary policy.

“Even more concerning to me with respect to your nomination is that your background…doesn’t seem related to the mission of the Federal Reserve,” said Sen. Bill Hagerty (R., Tenn.). “If I look at your list of publications and your speeches, it seems more like social science than it does economics and monetary policy.”

Dr. Cook responded by highlighting her research experience and former work at the Treasury Department and White House Council of Economic Advisers, where she said she worked on matters related to financial crises.

Much of questioning Thursday revolved around Ms. Raskin’s past calls for the Fed and other federal financial regulators to more rapidly address growing threats from climate-related events such as natural disasters and wildfires.

“They need to ask themselves how their existing instruments can be used to incentivize a rapid, orderly, and just transition away from high-emission and biodiversity-destroying investments,” she wrote in a September 2021 article for Project Syndicate.

On Thursday, Republicans said addressing climate change would go beyond the Fed’s mandate. “Unelected officials like Ms. Raskin want to misuse bank regulation to impose environmental policies that Congress has refused to enact,” Mr. Toomey said.

Ms. Raskin said that her views have remained consistent, saying that the Fed “should not pick winners and losers, they should not be exposing taxpayers to undue risk.”

Sen. Elizabeth Warren (D., Mass.) said the nominees’ views echo those of Mr. Powell, who has said banks should understand and be in a position to manage climate risks, including physical risks or so-called transition risks, or the costs associated with moving to a lower-carbon economy.

“I don’t support Chair Powell’s nomination for another term running the Fed, but even he thinks that it is just common sense that the Fed should work to mitigate the risk of significant economic loss triggered by climate change,” Ms. Warren said.

Steven Kelly, a research associate at the Yale Program on Financial Stability, said that while Ms. Raskin’s remarks Thursday were “inconsistent with her past views,” it is also reasonable to hold two competing views. “One as a policy maker and another one as a commentator who has the latitude to think more loftily,” he said, adding he thought Ms. Raskin is well qualified and deserves to be confirmed.

Ms. Raskin, a lawyer, served as a Fed governor and as a top Treasury Department official during the Obama administration. Before that, she served as Maryland’s state commissioner of financial regulation. She is a law professor at Duke University and is married to Rep. Jamie Raskin (D., Md.).

Banking committee Chairman Sherrod Brown (D., Ohio) praised all three nominees, saying they “understand the importance of empowering workers through full employment, and the need to combat inflation so paychecks go farther.”

Moderate Democrats on the Senate banking panel who may hold the key to Ms. Raskin’s confirmation signaled they would likely support her. Sen. Mark Warner of Virginia said he was pleasantly surprised that bankers in his state found her to be a “fair and balanced regulator” and that he believed that “bodes well for you.”

The confirmations of Dr. Cook and Mr. Jefferson, who are Black, would help Mr. Biden fulfill his promise to improve diversity atop the central bank, which in its history has had only three Black board members, all of them men. The most recent was former Fed Vice Chairman Roger Ferguson, who left the board in 2006.

“We’ve never had a table of people sitting at the Fed like you,” Mr. Brown told the nominees.

—Amara Omeokwe contributed to this article.

Write to Andrew Ackerman at andrew.ackerman@wsj.com