Senator Pat Toomey, R-Pa., Urged Mary Daly, president of the San Francisco Fed, to provide a briefing and decade of records of the reserve bank’s economic research activities. “The Federal Reserve can pursue Mission Creep or greet itself for political arrest. However, such activities are contrary to legal responsibilities, ”argued Toomey.
The San Francisco bank is one of the 12 institutions in the Federal Reserve system, each responsible for conducting monetary and regulatory activities in a specific US region.
Each reserve bank is responsible for overseeing and auditing the banks, lending to financial institutions, operating Fed services, and reporting on the unique business environment and development in their respective districts. The Fed system is funded by fees paid by banks and contributes billions of dollars to the Treasury every year.
Reserve banks also publish economic studies by human resource economists on a variety of topics relevant to the Fed’s mandate to promote maximum employment, stable prices and a safe banking system.
Toomey argues, however, that “a substantial amount” of “Fed research” in San Francisco “focuses on non-monetary issues and how these affect narrow subsets of people.” He specifically cited two San Francisco Fed blog posts on racial justice and a series of virtual seminars on climate-related economic issues hosted by the bank.
The San Francisco Fed also recently released research on fluctuations in cash flows, the economic impact of school closings, inflation, resilience of community banks, and differences between the US and other advanced economies in recovering from the COVID-19 recession.
While criticizing the research of other reserve banks, Toomey wrote that the “seemingly sudden and alarming inclusion of social research” at the San Francisco Fed “could be bitterly partial” and warranted an investigation by the banking panel.
He asked Daly to provide a briefing for the banking committee staff, all records related to the San Francisco Fed’s series of climate seminars, all documents related to research into climate change and racial justice dated July 1, 2019, and 10 years of annual reserve bank spending about research and public relations.
“We have received the letter from Sen. Toomey and are reviewing it. We look forward to discussing the contents with Sen. Toomey’s office,” said a San Francisco Fed spokesman.
The Hill said Toomey’s letter “opens another front in the battle between Republicans and the Fed over the central bank’s growing focus on climate change and other social issues that GOP lawmakers consider irrelevant to their mission and Democrats consider essential.”
Republicans have harshly criticized the Fed for setting up committees and investing in research into the potential climate-related risks of the banks it oversees. The Fed has also joined a global network of central banks and financial regulators focused on climate change.
Fed leaders have insisted that the bank will play no role in setting climate policy for the US, but rather focus on how climate change affects banking supervision.
Even so, Republicans fear that the bank may at some point divert lending away from certain sources of energy – something the Fed has ever ruled out.
Toomey and GOP lawmakers have also taken steps towards climate and diversity policies from the Treasury Department and the Securities Exchange Commission (SEC). Treasury Secretary Janet Yellen was severely pushed back by Republican lawmakers after declaring climate change an “existential threat” that required action by the department. It also opened the door to tax and regulatory policy to limit carbon emissions, but did not explain what it would look like.
Gary Gensler, Biden’s election to lead the SEC, also angered Republicans when he expressed his support for stricter climate, diversity and policy disclosure rules for public companies.
Indeed, there is considerable intense debate over a range of Congressional and executive research topics, as well as the democratic interest in using the Congressional Review Act to resolve the controversial Department of Health and Health rules passed in the final days of the Trump presidency cancel human services.
The MPs Raja Krishnamoorthi (D-Ill.) And Anna Eshoo (D-Calif.) Passed a resolution on Monday to disapprove of the HHS rule “sunset”, according to which all 18,000 regulations of the authority have to be checked every 10 years expired.
However, provisions of this are only available for the first 60 legislative days of the new Congress and would likely end sometime in April. The resolution currently has no co-sponsors from the Senate.
A legislative tool favored by Republicans in the early days of the Trump administration, the CRA was used to crush 14 Obama-era regulations. However, the Democrats were reluctant to use it, partly due to concerns about legal language in the rating agency, which is preventing the competent authority from coming up with another rule that is essentially similar.
So we’ll see. It is clear that the administration and Congress are keen to see changes implemented, including prominent program changes to curb climate change – important proposals that Washington Insider believes should be watched closely if considered.
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