Senator Pat Toomey (R-PA) on Monday opened an inquiry into what every conservative must be thinking; what on earth does the U.S. central banking system have to do with progressive liberal agenda items such as climate change? He launched his questions regarding “mission creep” with a letter demanding information on the Federal Reserve Bank of San Francisco’s research into climate economics.
“A sizable portion of FRBSF research appears to be focused on how matters unrelated to monetary policy impact narrow subgroups of people,” Toomey wrote in a letter to San Francisco Fed chief Mary Daly, which he released publicly along with a statement announcing the start of a broader review.
Toomey demanded a briefing from the bank’s policy advisor and documents relating to its climate research agenda and spending “in light of the FRBSF’s seemingly sudden and alarming inclusion of social research that risks being of a bitterly partisan nature.”
Over the last few years, the Fed has engaged in research into climate change, racial inequality and other politically hot topics traditionally seen as outside of the central bank’s purview.
Fed policymakers have repeatedly defended their research into income inequality, climate change and other topics, saying it is critical to their ability to understand the economy, conduct appropriate monetary policy, and ensure the safety and soundness of the banking system.
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“It is early days, but we feel like we have a responsibility to start the process of understanding,” Fed Chair Jerome Powell told lawmakers in testimony last week in response to questions about the Fed’s attention to climate risks and how banks handle them. “We don’t have a new mandate: this is consistent with our existing mandate of supervision of financial institutions,” he said.
Toomey and other Republican lawmakers see this trend as evidence the Fed is adopting a social agenda embraced by Democrats, or as an attempt to use central bank authority to implement a climate and other progressive ideologically-driven policy agenda.
In his letter to Daly, Toomey suggested such “mission creep” saps attention from the Fed’s mandated focus on employment and inflation, and suggested federal resources may be “better directed” to other federal agencies or programs.
He also suggested misuse of power based on political affiliation would be problematic. “Federal Reserve’s regulatory policy tools can affect distributional outcomes, but they can also easily be misused if the Federal Reserve, engaging in mission creep, tries to alter resource distributions according to normative or political leanings of Federal Reserve officials.”
Toomey had not so far sent similar letters to other eleven Fed banks. But the letter to the San Francisco Fed, which points to “social studies essays” on the economic impact of inequities in race, health insurance and housing penned by economists at the Boston, Minneapolis, and Chicago Fed banks, suggests other Fed banks are also in his sights.
There is not end to the depths progressives will go to insinuate their agenda into mainstream America.
Reuters contributed to this report.
ARTICLE SOURCE: thefederalistpapers.org