{"id":1389114,"date":"2022-03-18T22:22:58","date_gmt":"2022-03-19T02:22:58","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1389114"},"modified":"2022-03-18T22:45:04","modified_gmt":"2022-03-19T02:45:04","slug":"breitbart-business-digest-sarah-bloom-raskins-risky-bet","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/breitbart-business-digest-sarah-bloom-raskins-risky-bet\/","title":{"rendered":"Breitbart Business Digest: Sarah Bloom Raskin&#039;s Risky Bet"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">16<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fbreitbart-business-digest-sarah-bloom-raskins-risky-bet%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1389114&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p class=\"subheading\">Joe Biden wanted to put Sarah Bloom Raskin into one of the most powerful positions at the Federal Reserve because she is an advocate of using the central bank\u2019s regulatory powers to diminish the supply of fossil fuels. In an age of oil priced over $100 a barrel and the highest ever nominal price for gasoline, that was\u00a0<a href=\"https:\/\/www.breitbart.com\/politics\/2022\/03\/15\/radical-climate-change-policies-sink-biden-banking-nominee\/\">too much for the U.S. Senate<\/a>.<\/p>\n<p>So what is it that made Raskin so toxic that Sen. Joe Manchin (D-WV) killed her nomination by announcing his opposition? Basically, it was Raskin\u2019s radicalism on climate change issues. In recent years, she adopted the stance that the way to fight climate change was to discourage fossil fuel development by having bank regulators discourage investment in the sector.<\/p>\n<figure id=\"D-ROS-B1\" class=\"a8d\"><\/figure>\n<figure id=\"M-ROS-B1\" class=\"a8d\"><\/figure>\n<figure id=\"gmxrevmore\" class=\"H\"><\/figure>\n<p>Specifically, Raskin wants the Federal Reserve to force banks to weigh a novel kind of risk when making loans: The risk that people like Raskin, as Biden\u2019s pick for the Fed\u2019s bank supervision job, will get their way on climate policy.<\/p>\n<p>In her\u00a0<a href=\"https:\/\/sites.law.duke.edu\/thefinregblog\/2020\/03\/17\/testimony-of-the-honorable-sarah-bloom-raskin-before-the-senate-democrats-special-committee-on-the-climate-crisis\/\">testimony<\/a>\u00a0before the Senate Democrats\u2019 special committee on the climate crisis in March 2020, Raskin explained that her novel approach to bank supervision focused on the \u201ceconomic risks of climate change.\u201d She described a plan for bank capital requirements that reflect her views on what should be done about climate change. Worse, she wants supervisors to require banks to assume that her side will win the political argument over what should be done about it.<\/p>\n<p>In her testimony, Raskin described two different economic risks to banks from climate change. The first is relatively uncontroversial: the physical risks to assets that back loans. If sea levels were to rise significantly, for example, coastal properties would likely suffer. Loans against those properties might sour, leaving banks and investors with losses. According to Raskin, this exposure isn\u2019t understood by bank regulators. If that\u2019s right, then the supervisory staff at the Fed should get to work.<\/p>\n<figure id=\"M-ROS-B2\" class=\"a8d\"><\/figure>\n<div id=\"attachment_20268146\" class=\"wp-caption aligncenter\">\n<p class=\"wp-caption-text\">Sarah Bloom Raskin, nominee to be vice chairman for supervision of the Federal Reserve Board of Governors, is sworn in before her Senate confirmation hearing on February 3, 2022, in Washington, DC. (Bill Clark\/Getty Images)<\/p>\n<\/div>\n<p>But it\u2019s worth noting that lenders and investors are aware of the risks of climate change. Like everyone else, bankers regularly encounter claims that climate change is increasing the risk of extreme weather, rising sea levels, wildfires, and any number of hazards that can hurt values of physical assets. These are priced into investments and loans made against those assets, sometimes explicitly and sometimes implicitly. Climate change isn\u2019t sneaking up on anyone.<\/p>\n<p>Raskin\u2019s second climate change risk\u2014what she describes as \u201ctransition risk\u201d\u2014deserves more attention. It is the risk that financial institutions could be hurt by \u201ccosts associated with transition efforts to reduce carbon dependence and adopt alternative technologies,\u201d as Raskin put it in her 2020 testimony. In other words, she wants banks and investors to price in the risk that climate regulation will hurt the value of their assets.<\/p>\n<p>In Raskin\u2019s view, the risk is most acute if the transition is \u201cexcessively delayed.\u201d She compares this scenario to the global financial crisis, in which the market appeared suddenly to wake up to the low quality of mortgage debt and related instruments that sat on the balance sheets of so many large financial institutions. In her view, regulators and bankers ignored the risks and warnings until it was too late.<\/p>\n<p>\u201cAnd when federal intervention did in fact occur, the repricing of mortgages and mortgage-backed securities was so sharp and dramatic that what might have been a minor downturn had become a recession that was the longest and deepest of any since the Great Depression,\u201d Raskin wrote.<\/p>\n<figure id=\"M-ROS-B3\" class=\"a8d adSo\"><\/figure>\n<p>If it seems odd to say that federal intervention triggered the financial crisis, that is because it is odd. The mortgage bubble imploded not because federal regulators finally woke up and imposed sensible regulations. The regulations came after the implosion\u2014years after, in the form of the 2010 Dodd-Frank Act.<\/p>\n<p>But never mind. In Raskin\u2019s fairy-tale version, regulators knew better than the banks when it came to mortgages\u2014and they know better about climate change than banks do today. Note that this isn\u2019t a question of whether the science is settled; or if climate change is real; or what the right policies are to fight, mitigate, or reverse it might be. Raskin could be 100 percent right about the climate and still be wrong about both the actual future policy response and the politics of climate change. We might, as a democratic polity, simply choose a different course\u2014even a wrong course. In that case, Raskin\u2019s political forecasts would be wrong even if her climate forecasts were correct.<\/p>\n<p>Even if we assume that Raskin is right about what would be required to keep global temperatures from rising more than 1.5 degrees\u2014and even if we assume she is right about the prudence of avoiding a more significant change in temperatures\u2014it seems an extreme act of hubris for her to insist that the transition is inevitable. Maybe carbon capture and sequestration will make emissions a nonissue. Maybe fusion will finally work. We simply don\u2019t know\u2014neither what policies will be required nor which ones will actually come into force.<\/p>\n<p>But Raskin not only expects assent to the inevitability of anti-emissions regulations\u2014she wants to make that inevitability part of bank supervision. Instead of allowing banks to formulate their own ideas about likely policies\u2014ideas that may conflict and will compete to persuade investors\u2014Raskin wants a uniform approach.<\/p>\n<p>The irony is that it was exactly this standardization that helped bring about the global financial crisis. Instead of banks holding a variety of positions on the housing market and mortgage risk, all too many held the view that mortgage-backed securities were \u201csafe as houses\u201d\u2014in part thanks to regulations that gave MBS preferential treatment. These regulations, and thus bank asset allocations, undercounted default risk and actually made the whole system more fragile.<\/p>\n<p>Setting banks marching along the same path when it comes to climate change and climate regulation isn\u2019t prudent supervision. It\u2019s an invitation to another disaster triggered by a crowded bet on climate.<\/p>\n<p>Fortunately, Sen. Manchin and every Republican senator realized that regulating climate through novel bank supervisory stances was a bad idea. So, for now, we\u2019ll be spared this mistake. Raskin took a bet that America was ready for climate regulation through bank supervision rather than legislation passed by constitutionally elected lawmakers. She lost.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Joe Biden wanted to put Sarah Bloom Raskin into one of the most powerful positions at the Federal Reserve because she is an advocate of using the central bank\u2019s regulatory<\/p>\n","protected":false},"author":1,"featured_media":2315279,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1389114","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1389114","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1389114"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1389114\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1389114"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1389114"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1389114"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}