Sen. Pat Toomey, R-PA, wrote letters to the leaders of three regional Federal Reserve banks Sunday, seeking information about their recent work on racial economic equality, calling the moves politicized and counter to the central bank’s mandate, according to The Wall Street Journal.
The Senate Banking Committee’s ranking member told the leaders of the Atlanta, Boston and Minneapolis Federal Reserve banks the race-related work is "wholly unrelated to the Federal Reserve’s statutory mandate."
- The letter follows one Toomey sent in March to Mary Daly, the chief of the San Francisco Fed, seeking details on the central bank satellite’s biweekly virtual seminars on climate economics and community development. Toomey said the research is at odds with the Fed’s independence and constitutes "mission creep" into territory already covered by other federal entities.
Toomey told the central banks that some of their recent work on racial issues suffered from severe bias.
"All of the policy prescriptions recommended to treat the presumed ubiquity of racism required a more intrusive and expansive government," he wrote, according to the Journal.
In his letters, Toomey requested briefings with the banks on their racial equality work no later than June 7, and demanded documents and financial information about the work.
"We’ll of course carefully review correspondence from the senator," a spokesperson for the Boston Fed told the Journal.
A spokesperson at the Atlanta Fed said the bank received Toomey's inquiry and looks forward to discussing with him "how better understanding racial inequality helps the Federal Reserve reach its mandate of maximum employment and ensure economic gains are widely experienced across the population, regardless of race."
The Minneapolis Fed also acknowledged receipt of the letter, according to the Journal.
Toomey’s most recent letters to the regional reserve banks come as Republican lawmakers have stepped up their questioning of the Fed’s role in climate- and racial justice-related issues, accusing the central bank of overstepping its mandate.
At a March hearing in front of the House Financial Services Committee, Fed Chair Jerome Powell said the central bank is in the early stages of understanding the risks climate change poses to regulated financial institutions, adding it was a responsibility of the central bank.
Rep. Frank Lucas, R-OK, told Powell his constituents are concerned that financial regulators may be moving toward regulation and supervision with environmental policy objectives, which could "potentially discourage banks from doing business with entire sectors of the economy."
Powell and Treasury Secretary Janet Yellen, who also attended the hearing, assured the committee they didn’t believe it was the role of the Fed or the Treasury to regulate what legal businesses banks can lend to or invest in.
More recently, Toomey has taken issue with the Biden administration's executive order directing Yellen, who is head of the Financial Stability Oversight Council (FSOC), to issue a report on "climate-related financial risk data."
In a statement last week, Toomey said the executive order demonstrates that the Biden administration "is preparing to misuse financial regulation to further environmental policy objectives."
"Not only would such regulation exceed the scope of financial regulators’ respective missions and authorities, but it would also distort capital allocation, raise energy costs for consumers, and slow economic growth," he said.
Changes should be enacted through the legislative process by legislators, not by financial regulators "who have neither experience nor accountability," Toomey added.