US Senator Pat Toomey (R-PA) interrogates Treasury Secretary Steven Mnuchin during a “Review of Corporate Loans Critical to National Security” hearing in the Dirksen Senate Office building in Washington on December 10, 2020.
Sarah Silbiger | Pool | Reuters
Aiming at the Federal Reserve, Senator Patrick Toomey wrote a letter Monday to express concern over the central bank’s push on social issues such as climate change, race and health insurance.
In particular, the Pennsylvania Republican cited research from the Fed’s San Francisco District on a number of issues that he said exceeded the central bank’s traditional mandates of employment, inflation and banking supervision.
Toomey warned Fed officials that his independence from political influence could be challenged if he pursued issues normally addressed by government agencies.
“The Federal Reserve can pursue Mission Creep or greet itself for political arrest,” Toomey wrote in a letter to San Francisco Fed President Mary Daly. “However, such activities are contrary to their legal 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 allocating substantial federal funding to efforts that are intended to be independent and impartial.”
The San Francisco Fed paper topics cited by Toomey included health insurance and key service workers in New England. Other areas addressed were race, occupation and Covid-19 infection rates as well as plans for a virtual seminar on climate economics.
The Senator instructed the San Francisco Fed to respond to a series of inquiries by April 12.
“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 Fed spokesman in San Francisco.
Among the issues the Fed has inserted itself on, climate change is perhaps the worst.
Fed Governor Lael Brainard was the biggest advocate of banks’ demand to plan climate-related events, and said in a recent speech: “It is becoming increasingly clear that climate change has a major impact on the Federal Reserve in its perception of the climate EU delegated tasks could have Congress. “
Last Tuesday, Brainard announced the formation of two Fed committees to develop strategies for dealing with climate change and its effects on financial institutions.
Chairman Jerome Powell was interviewed on Capitol Hill on the subject, with Republican lawmakers in particular expressing concern about why the central bank has fitted into the climate issue. In an NPR interview last week, he admitted that the climate “is not primarily a problem for the Fed, but we have a role to play”.
“We have a fairly narrow but important spectrum of responsibilities, and those who are relevant here are really regulating and overseeing banks and some other financial institutions to make sure they understand the risks they are taking and that they have appropriate plans and tools and manage those risks. And that includes risks from climate change, “Powell said. “We see it as something that we adopt as part of our traditional regular legal mandate.”
However, Toomey said the Fed had got too far into “politically charged research,” specifically spearheading both climate change and racial justice.