Sarah Bloom Raskin was always going to be successful, no matter what path she chose. She just happened to choose the path that passes through the revolving door.
Raskin is President Joe Biden’s nominee to be the top bank regulator at the Federal Reserve. On a meritocratic level, her resume qualifies her for the job. She has lots of relevant experience. But on an ethical level, Raskin’s career path disqualifies her from the job. People who serially cash out to monetize public service corrupt both government and industry. This is something Biden should not reward.
Sarah Bloom graduated from Amherst College magna cum laude in 1983 and went on to Harvard Law School. When she left Harvard Law in 1986, she joined the law firm Mayer Brown & Platt and later Arnold & Porter. She moved to the Washington, D.C., area and married liberal activist Jamie Raskin, who is now a Democratic congressman from Maryland.
She entered the policymaking world in 1993 when she became counsel to the Senate Banking Committee, a known hub of revolving-door staff/industry workers. Committee staffers cash out to banks, other financial institutions, and their lobbying and consulting firms in great numbers.
She left the Senate Banking Committee in 1997 and served as general counsel for two companies: Columbia Energy Services and the Worldwide Retail Exchange, according to online bios.
Raskin in 2003 became one of the first managing directors at Promontory Financial Group. Promontory is a hive of former regulators and Banking Committee staffers. The firm sells insider access and insight to the very companies the directors used to regulate.
Eugene Ludwig, Bill Clinton’s comptroller of the currency, founded Promontory shortly after leaving the Clinton administration. Ludwig is something of a pioneer in the whole financial services revolving-door industry. Former banking committee counsels Amy Friend and Jonathan Gould have been directors at Promontory, as have former SEC heads Mary Schapiro and Arthur Levitt.
In 2007, Raskin passed back through the revolving door again to become Maryland’s top banking regulator. She left that job a few years later when President Barack Obama named her as a Federal Reserve governor. From there, she became Obama’s deputy treasury secretary.
When Obama left the White House in 2017, Raskin cashed out a second time, joining the board of directors of investment giant Vanguard. She also joined the board of financial technology company Reserve Trust, whose business model involves its extraordinary access to the Federal Reserve.
Raskin lobbied the Federal Reserve on behalf of Reserve Trust and then sold her stock in the company for $1.5 million. While she held the stock, and while the Fed was considering Reserve Trust’s application for access to the Fed’s Master Account, her husband Jamie failed to disclose the stock as required by law.
Raskin also sits on Promontory’s board, A former Fed and Treasury official is another selling point for Eugene Ludwig to use for roping in banks as clients.
If Raskin rejoins the Fed as a top regulator, Ludwig will be able to assure clients that he can text Raskin with ease to gain information and explanations.
As Congress considers Sarah Bloom Raskin’s nomination, it should consider how they feel about the revolving door. If someone has cashed out of the federal government twice, you should assume she expects to do so a third time. That should raise questions about how an imminent cash-out will influence her decision-making while in office.
Then there’s the question of incentives. Does Biden think this revolving door is good or that it is corrupting? What do senators think?
If they confirm Raskin, they are clearly stating that the revolving door is just fine. If they want to deter regulators from cashing out to the companies they are regulating, Congress ought to make it clear there’s a cost — or at least that you only get to pass through the revolving door so many times.
Federal Reserve Nominees
