These are precarious times for the American economy. Inflation has reached generational highs while the stock market is experiencing its most significant pullback since March 2020. As it responds, the Federal Reserve is walking a financial tightrope: Raise interest rates too little and inflation gets worse; raise interest rates too much and the economy crashes. But while central bankers are trying to maintain their balance, President Biden is cutting the rope.
Last month the president nominated Sarah Bloom Raskin, a former Obama financial regulator, to serve as the Fed’s new vice chairman for supervision. The Federal Reserve’s mission, as outlined by Congress, is explicitly nonpolitical. Good monetary policy requires the Fed’s leaders to set partisanship and personal preferences aside. But judging by her past public statements, Ms. Raskin would have a hard time doing that. A hallmark of Ms. Raskin’s career has been her vendetta against U.S. energy producers—a vendetta she likely plans to take with her to the Fed. Last summer she advocated using the Fed’s stress tests to penalize banks that serve fossil-fuel companies. She has also urged the Fed to use its risk-based capital standards to drive capital away from oil and natural-gas firms toward “sustainable investments.” She has even gone so far as to suggest that the Fed should de-bank energy companies by establishing portfolio or concentration limits for banks on “highemissionassets.” Why so much disdain for oil and natural gas? Because, in Ms. Raskin’s opinion, it’s a “dying” industry that poses climate-change-related risks to the economy. Never mind that there is currently no renewable energy that could feasibly replace oil and natural gas, which produce 70% of the nation’s energy, so punishing investment in them would only raise the already inflated American cost of living. Never mind that U.S. oil and gas companies contribute nearly 8% of U.S. gross domestic product and employ more than 10 million Americans, many of them blue-collar workers. Never mind that oil and gas companies are a principal source of green-energy innovation, producing one of the largest volumes of green patents as well as some of the highest quality of any industry in the world.
Ms. Raskin has been nominated to be a vice chairman at the Federal Reserve, not the head of an environmental, social and governance fund. The Fed’s only mandates are stable prices and low unemployment. That’s why it’s endowed with such independence and power—it isn’t meant to be political. Whether the government limits fossil fuels is the purview of elected representatives in Congress, not insulated bureaucrats.
Ms. Raskin’s public statements make clear that she would use this position to reshape our financial system in ways Congress never intended. Her activist approach is both undemocratic and highly inappropriate for such an influential position. The vice chairman for supervision has primary say in the central bank’s lending decisions. And it’s almost certain Ms. Raskin would use her station to punish industries she deems unfavorable by simply withholding capital. In this regard, Ms. Raskin’s confirmation would harm not only the wider U.S. economy but the Fed’s reputation. That is why 41 industry trade associations joined in a letter Friday opposing her nomination. In question is not only a single nomination but the independence of the Fed itself. If her nomination succeeds and Ms. Raskin is allowed to use the levers of monetary policy to advance her own activism, then the Fed—one of the last institutions of American life that have yet to be politicized— will have become another partisan weapon, distrusted by voters.
This is the last thing the economy needs. Mr. Biden said he is serious about curbing inflation and lowering energy prices. But appointing a financial regulator keen on kneecapping the oil-and-gas industry will only make things worse for the everyday Americans who already find themselves paying 40% more at the pump today than they were a year ago.
If the president wants to ease Americans’ financial burdens, then he will withdraw Ms. Raskin’s nomination. Should he fail to do so, then the Senate must do what’s right by the American people by voting against her confirmation.
Mr. Stewart is president of the U.S. Oil and Gas Association and a former chief of staff for the House Natural Resources Committee. Ms. Sgamma is the president of Western Energy Alliance, which represents oil and natural-gas producers in the Rocky Mountain West.