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US Senator Pat Toomey (R-PA) questions Treasury Secretary Steven Mnuchin during a hearing on “The Review of Business Loans Critical to Maintaining National Security” before the Congressional Oversight Committee at the office building of the Dirksen Senate, Washington, December 10, 2020.
Sarah Silbiger | Swimming pool | Reuters
Senator Patrick Toomey is targeting the Federal Reserve, expressing concern in a letter Monday about the central bank’s foray into social issues such as climate change, race and health insurance.
Specifically, the Pennsylvania Republican cited research from the San Francisco Fed District on a host of issues that he said go beyond the central bank’s traditional mandates on jobs, inflation and banking supervision. .
Toomey warned Fed officials that her independence from political influence could be called into question as she tackles issues that government agencies normally handle.
“The Federal Reserve can continue its mission or welcome the political capture,” Toomey wrote in a letter to San Francisco Fed Chairman Mary Daly. “But such activities are inconsistent with its statutory responsibilities; only Congress has the power to reform the Federal Reserve or change its mission.”
He added that while the research “may be meritorious, the Federal Reserve is devoting significant federal resources to efforts that are supposed to be independent and non-partisan.”
Among the San Francisco Fed’s writing topics, Toomey cited health insurance and essential service workers in New England. Other areas covered included race, occupation and Covid-19 infection rates, as well as plans for a virtual seminar on climate economics.
The senator ordered the San Francisco Fed to respond to a series of inquiries by April 12.
“We have received and are reviewing Senator Toomey’s letter, and look forward to discussing it with Senator Toomey’s office,” a San Francisco Fed spokesperson said.
Of the issues the Fed has gotten into, climate change is perhaps the most annoying.
Fed Governor Lael Brainard has been the biggest advocate for pressuring banks to plan for climate-related events, saying in a recent speech: “It is increasingly clear that climate change could have important implications for the Federal Reserve in carrying out its responsibilities entrusted by Congress. “
Last Tuesday, Brainard announced the formation of two Fed committees that will propose strategies to deal with climate change and how it affects financial institutions.
President Jerome Powell was questioned on Capitol Hill on the issue, with Republican lawmakers in particular expressing concern over the central bank’s reasons for getting involved in the climate issue. In an interview with NPR last week, he admitted that the weather is “not primarily a problem for the Fed, but we have a role to play.”
“We have a fairly small but important set of responsibilities, and the ones that are relevant here are really to regulate and supervise banks and certain other financial institutions to ensure that they understand the risks that they run and that they run. have appropriate plans and tools to manage these risks. And that includes the risks associated with climate change, ”said Powell. “We see it as something that we take on as part of our traditional regular statutory mandate.”
Toomey, however, said the Fed has strayed too far into “politically charged research,” specifically citing both climate change and racial justice.
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