Progressive Bloom-Raskin Calls for Punishment of Banks Lending Conventional Energy
Biden’s decision to nominate a Kazakh immigrant from the USSR, Saule Omarova, to the post of chief regulator of American banks was received with a shudder by the Republicans. A few moderate Democrats also experienced the shock experienced by the “elephants”, because even by the standards of a thoroughly polarized Washington, it was too much to promote a hardened Marxist, who, in fact, advocates the nationalization of banks, to a leading role in the financial supervisory authorities.
Omarova was forced to withdraw her candidacy, but before the centrists in both parties had recovered from the shock, the president surprised them with a new personnel maneuver: he would read Obama’s associate Sarah Bloom-Raskin as deputy chairman of the Central Bank. If she is somehow different from Omarova, then only by nationality. Not at all radical in their views.
The central bank is now trying to figure out how to link the fight against accelerating inflation with the task of maintaining economic activity and preventing unemployment from rising. Specifically: when to start raising the key rate, how much to raise it, how often, and so on. But for the Biden nominee, the usual issues on the agenda of the Central Bank seem very boring. It is beckoning on a more important mission: how to use the control levers at the disposal of the Central Bank to wring the neck of traditional energy based on fossil fuels, and at the same time stimulate progressive energy based on sun and wind in every possible way? Which, it is worth noting, has nothing to do with the original mandate of the country’s main banking institution.
Every commercial bank in America is obliged to keep a part of the attracted funds as a reserve against its obligations, which part is set by the Central Bank according to a very complex formula. In this regard, Bloom-Raskin has gained dubious fame for her endless calls for the Central Bank to punish commercial banks lending to traditional energy. For example, by imposing on them higher norms of required reserves on the grounds that they supply capital to a sector that is extremely risky and socially harmful. This allegedly makes their financial position potentially more vulnerable compared to those banks that lend to energy companies that exploit renewable sources. Bloom-Raskin is not averse to getting the Central Bank to adopt regulations that set a general limit for lending to fossil energy by each commercial bank separately.
Not only is fossil energy dying as an industry, but through its negative impact on the climate, it also endangers the national economic system as a whole, says Biden’s nominee. At the same time, as the Wall Street Journal rightly notes in its editorial commentary, fossil energy today satisfies 70% of America’s needs for fuel resources, and the Greens are not able to find a replacement for them in the foreseeable future. The share of oil and gas accounts for 8% of US GDP, it employs over 10 million workers and employees. Moreover, it is the oil and gas sector that is the engine of progress in the field of environmentally friendly technologies, it owns not only a large number of “green” innovations, but also “green” patents of the highest standard.
The US Central Bank, the Wall Street Journal recalls, is not a political body, but a supra-political, independent one, its duties include ensuring price stability and low unemployment, and in no way setting a policy in the environmental field. This is the prerogative of the legislative and executive branches of power, accountable to voters, and not the bureaucracy. Blocking financial oxygen by the Central Bank to fossil energy would be equivalent to a putsch, the principle of separation of powers would be violated in the most unceremonious way. The appointment of Sarah Bloom-Raskin by Biden marks another triumph of progressive ideology over reality, the Wall Street Journal states, as the midterm elections are just around the corner, citizens are currently paying 40% more for gas than a year ago, and the White House is not less puts forward to the second role in the Central Bank a person whose priorities, put into practice, will inevitably turn into a further rise in the cost of energy resources.
Newspaper headline:
Biden’s Radical Appointments