Biden Fed Vice Chair Nominee Successfully Lobbied For Former Employer

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by Tyler Durden
Friday, Feb 11, 2022 - 11:00 PM

Sen. Pat Toomey has accused Sara Bloom Raskin, President Biden's nominee to replace Randall Quarles as the Fed's Vice Chair for Supervision, of helping an obscure fintech firm obtain an "unusual" degree of access to the Fed's payment system. Now, CNBC has corroborated Toomey's suspicions by confirming that Raskin did indeed lobby Kansas City Fed President Esther George in 2017.

Raskin placed the call to George with the intent to lobby for her employer, a small fintech firm called Reserve Trust, to receive a Fed "master account". The lobbying occurred during 2017, when Raskin had left her role as the Treasury Department's deputy secretary. Prior to her Treasury work, she spent more than three years at the Fed as one of its governors.

After initially denying RT's request for a master account, the Kansas City Fed approved the company's second request for an account in 2018 after Raskin called and lobbied for them with Quarles.

Earlier this week during Raskin's confirmation hearing before the Senate, Toomey blased Raskin with questions about her relationship with Reserve Trust. Specifically, Toomey asked Raskin to turn over documents and to answer a series of detailed questions regarding her work for Reserve Trust, including what actions she took to help it obtain a Fed master account and any communications between Raskin and the Kansas City Fed or the Fed regarding Reserve Trust’s application.

In a letter sent to the Kansas City Fed, Toomey claimed that George had told him about the call that Raskin had made in 2017.

"On the evening of February 2, 2022, you and your staff spoke with my staff," Toomey told George in his letter.

"On that you call, you revealed that Ms. Raskin had, in fact, personally called you about Reserve Trust’s master account application after it had been denied."

The letter from Toomey, the ranking member on the Senate Banking Committee, came more than a week after Raskin was grilled by Senate Republicans during her confirmation hearing to become the next Fed vice chair for supervision, replacing Randal Quarles.

Bloom Raskin has been facetious about her work for Reserve Trust: Sen. Cynthia Lummis asked Raskin several times whether she had lobbied on behalf of Reserve Trust, but Raskin repeatedly refused to answer that question during her public confirmation hearing.

Later, She suggested to Toomey that she didn't recall making any outreach on behalf of Reserve Trust to help it secure approval.

Raskin received equity in Reserve Trust when she joined its board, but sold her financial stake upon her 2019 departure from the company for about $1.5 million.

To this day, Reserve Trust’s master account remains the company’s single greatest asset to potential customers, and potential acquirers. The company brags about this access on its website in a prominent spot.

"Reserve Trust is the first fintech trust company with a Federal Reserve master account," reads the homepage for "We provide payments services that financial institutions and fintechs have previously only been able to obtain from correspondent and sponsor banks."

The White House has doubled down on its support for Raskin while insisting that she has been ethically beyond reproach.

"Sarah Bloom Raskin has always taken her ethical obligations very seriously during and after her public service," the White House told CNBC on Feb. 3.

But at the time Raskin called the Kansas City Fed to lobby for her new employer, she was a freshly retired top government official. There were no suggestions that Raskin's actions were illegal - but rather an example of the "revolving door" between corporate interests and politics. On Wednesday, Raskin and two other people nominated by Biden to Fed governor posts - Lisa Cook and Philip Jefferson - promised "not to seek any employment or compensation" from a financial services company after they leave the Federal Reserve.