Federal Reserve Governor Sarah Bloom Raskin was confirmed by the U.S. Senate to be the Treasury Department’s No. 2 official and highest-ranking woman ever.
Raskin today was approved in a voice vote as deputy Treasury secretary, a job that can touch upon anything the department handles from coordinating financial rules to relations with emerging economies such as Ukraine. The deputy secretary also typically oversees the department’s day-to-day operations.
Raskin’s record as a Fed governor and as Maryland’s top financial regulator from 2007 to 2010 suggests she will have a role in revamping U.S. housing finance and the implementation of the Dodd-Frank law, and may be more sympathetic to consumers than to the financial-services industry.
“She has a very long record of ensuring that there are clear, strong rules in the financial markets to protect workers, families and the financial system from the excesses of Wall Street,” said Dennis Kelleher, president of Washington-based Better Markets Inc., a non-profit group that backs stricter bank regulation. Change in housing finance “is going to need the strong voice of Sarah Raskin to make sure that Wall Street doesn’t get the profits and taxpayers get the bill.”
Fed spokeswoman Michelle Smith said in an e-mail that tomorrow will be Raskin’s last day at the central bank and March 14 will be her first at the Treasury. Fed policy makers plan to meet March 18-19. Stanley Fischer, the nominee to be Fed vice chairman, and governor nominees Lael Brainard and Jerome Powell are scheduled to testify at a confirmation hearing tomorrow before the Senate Banking Committee.
Raskin, as Maryland’s top financial regulator, was instrumental in rewriting the state’s foreclosure process, imposing penalties for mortgage fraud and giving homeowners more time to try to avoid foreclosures. She also challenged payday lenders.
The banking committee yesterday announced a plan to dismantle the U.S.-owned mortgage finance companies Fannie Mae (FNMA) and Freddie Mac (FMCC) and replace them with government bond insurance that would kick in only after private capital suffered losses of at least 10 percent. The White House praised the proposal as “a workable bipartisan approach.”
The two companies extended a slump today, with Fannie Mae shares plunging 12 percent to $3.54 in New York trading, after tumbling 31 percent yesterday. The stock is still up from $3.01 on Dec. 31, and 29 cents a year ago. Freddie Mac declined 17 percent today to $3.49, after dropping 27 percent yesterday.
While at the Fed, Raskin initially voted against the Volcker rule banning bank proprietary trading in 2010 because she said it wasn’t tough enough. Her dissent put her at odds with then-Fed Chairman Ben S. Bernanke and current Chair Janet Yellen. Raskin, along with Bernanke and Yellen, supported the revised final version that was approved in December 2013.
Raskin, a Harvard Law School graduate, has criticized the speculative bets banks make with their own capital as an “activity of low or no real economic value.”
Raskin was selected by President Barack Obama in July and approved by the Senate Finance Committee in January. The deputy position has been vacant since Neal Wolin left the department in September. Mary Miller, the undersecretary for domestic finance, has been acting deputy secretary since then.
Raskin’s confirmation is part of a cycle of switches between Fed and Treasury officials. Nathan Sheets, a former Fed and Citigroup Inc. economist, is Obama’s choice to replace Brainard as undersecretary for international affairs. He is working as a counselor to Treasury Secretary Jacob J. Lew while awaiting a Senate confirmation hearing.
Treasury “is gaining a proven and experienced leader who is dedicated to promoting economic prosperity, and enhancing business and consumer confidence,” Lew said in a statement today.
Senator Elizabeth Warren, a Massachusetts Democrat, said in a statement she has “worked closely with Sarah in the past and know she brings strong, valuable judgment and experience to the position.”