Being a politician or a regulator in D.C. is far too often the path to riches. The revolving door and congressional insider trading have corrupted Congress and every presidential administration.
The Federal Reserve has never been totally above the swamp, but it’s imperative to keep the central bank cleaner than the other parts of our government.
By nominating revolving-door lobbyist Sarah Bloom Raskin to a Federal Reserve position, President Joe Biden has endangered the Fed’s integrity. Every senator who cares about good government must vote “no” on Raskin’s nomination to be the Fed’s top bank regulator. Make the president send a nominee who doesn’t use positions of public trust as platforms for private enrichment.
After cashing out from the Federal Reserve and landing plush board seats at a few financial firms, Raskin lobbied that same Fed for a special favor for one of her companies, a financial technology company called Reserve Trust. The Fed granted that special favor, which created massive value for Reserve Trust. Raskin was paid for her efforts in stock, which she sold for $1.5 million. So that was what she managed to sell her Fed access for, at least in that one instance.
Oh, and Raskin’s husband, Rep. Jamie Raskin, never reported that the couple held Reserve Trust stock until after the sale.
This has all the corrupt elements of the swamp: the revolving door, insider enrichment, and violation of transparency laws. Congress cannot reward such corruption by approving one more Raskin to pass through the revolving door.
Reserve Trust, a business-to-business payment processor, was smart to place Raskin on its board and compensate her entirely in stock so that she was personally invested in its success. She was an Obama appointee to both the Federal Reserve and the Treasury Department — with all the access that brings.
Reserve Trust’s play is entirely about special regulatory treatment. It’s in the name — a trust company, not a bank, that has access to the Federal Reserve’s master account. This company can do what other nonbanks cannot — directly move money from one customer to another without needing a bank as an intermediary.
Reserve Trust holds this regulatory advantage as its primary selling point. “Reserve Trust is the first fintech trust company with a Federal Reserve master account,” the company states upfront on its homepage.
The company’s entire business model is based on such special access to the Fed, and so of course it made sense to put former Fed governor Raskin on its board.
That still doesn’t excuse Raskin’s lobbying the Fed. Raskin says she can’t recall whether she lobbied — ha! — and she hasn’t denied lobbying. Multiple Senate offices received confirmation from insiders who would know that Raskin called the Kansas City Fed and asked for the extraordinary favor of granting this nonbank trust company access to the master account — a request the Fed had previously rejected.
When Raskin asked, though, the Fed said yes.
This made Reserve Trust very valuable, which meant Raskin could sell her shares at a nice profit.
Raskin’s actions meet the federal definition of lobbying. And although it was not illegal for her to lobby her former employer, it is shady. It also involved the breaking of the congressional disclosure law. Had Rep. Raskin disclosed that the couple was heavily invested in Reserve Trust, that might have ruined her prospects at obtaining the Fed’s special favor for Reserve Trust.
The bigger scandal is what’s legal: Mrs. Raskin’s use of her insider access to get special privileges that made her rich.
We propose a simple rule: If you cash out of a government agency and get rich lobbying that agency for special interest policies, you do not get to return to that agency.
Democrats, given their expressed disdain for the revolving door, should support this rule, and both parties should enforce it by voting “no” on Raskin.
