GOP Sen. Pat Toomey of Pennsylvania floated on Wednesday subjecting the Federal Reserve System to new disclosure laws after several of the Fed‘s regional banks refused to provide information on why they were conducting “highly politicized social” research.
Mr. Toomey, the top Republican on the Senate Banking Committee, raised the specter in a letter to four Federal Reserve banks — Minneapolis, Atlanta, Boston and San Francisco — that he said have refused to cooperate with Congress in recent months.
“If the Atlanta Fed continues to resist a legitimate congressional oversight request, perhaps Congress should consider subjecting the Atlanta Fed and the other Federal Reserve regional banks to the same transparency and accountability laws imposed on nearly every other federal agency or organization,” wrote Mr. Toomey in a letter to the Federal Reserve Bank of Atlanta, Georgia.
Near the end of March, Mr. Toomey opened a probe into several regional Federal Reserve banks for funding “politically charged” research into divisive social topics such as climate change and racial justice. The goal of that research, according to Mr. Toomey, was to subvert the information used by the financial sector to advance liberal causes.
The Federal Reserve Bank of Minneapolis, for instance, has made a public “commitment to dismantling structural racism” in the wake of 2020 killing of George Floyd while in the custody of local police.
The Minneapolis bank has also initiated a taxpayer-funded symposium on the topic of “racism and the economy.” The events detail how the “ever-present legacy of racism” is responsible for the economic, housing and educational disparities between Black and White Americans.
Similarly, the Federal Reserve Bank of San Francisco has undertaken extensive research on the financial risks of climate change. The bank has published numerous reports and held various seminars on the topic, often hosting avowedly political figures as financial experts.
As part of the probe, Mr. Toomey and his colleagues requested briefings and documents from four of the banks detailing the decision-making when undertaking such partisan ventures. Lawmakers complain that the regional banks have refused to comply apart from offering rudimentary briefings on the topic.
“The Fed’s complete refusal to turn over a single document naturally begs the question: What is the Fed trying to hide?” said a GOP aide on the Banking Committee. ”From woke speech codes to their dalliance with critical race theory, it appears liberal activists have taken over at some of the regional Fed banks.”
While the Federal Reserve Banks began acting long before Mr. Biden came into office, Republicans say the White House is doing little to tamp down the research. Complicating matters is that few regulations exist governing public accountability and transparency at the Federal Reserve.
Mr. Toomey noted that a Federal Reserve bank’s “budget is not subject to congressional appropriations or authorization, its leaders are neither democratically elected nor Senate confirmed, and it is not subject to public transparency laws, such as the Freedom of Information Act (FOIA) and the Federal Advisory Committee Act, and public recordkeeping laws like the Federal Records Act.”
Fed defenders say the central bank must be independent and insulated from partisan political pressure because of its mandate to oversee the nation’s money supply and regulate the banking system.
Although Mr. Toomey hopes the four local banks will eventually comply with his investigation, he is not ruling out the need for broader reforms to the system.
The Federal Reserve’s focus on climate change and racial justice comes as the country begins to see the early signs of inflation. Across the board, consumers and companies alike have seen prices rise substantially, while unemployment remains high after the coronavirus pandemic.
A recent survey by the Morning Consult found that more than one-third of adults believe they are now spending more on groceries than they did at the start of the year.
Republicans say the threat of inflation only increases the need for more openness from the Fed.
“With the price of everything from gasoline to homes skyrocketing and inflation becoming a bigger concern, I think it’s fair for the American people to want to know what in the world the Fed is doing,” said the Banking Committee aide.