Sen. Cynthia Lummis (R-WY) wrote an article for The Federalist this week pointing out how one of Joe Biden’s current nominees to a critical federal office is part of Washington’s “revolving door.” She was referring to the common practice of bringing in people who seek to use their “public service” as a way to increase their ability to realize huge profits in the private sector.
Lummis referred to Sarah Bloom Raskin, who worked during the Obama Administration at the Federal Reserve and the Treasury Department until President Trump took office in 2017. She then was appointed to the board of Reserve Trust, a start-up financial technology company. As a “fintech” business, Reserve Trust is not a traditional depository banking institution.
Reserve Trust was actively seeking to participate in the payment system used by the Federal Reserve by obtaining a “master account.” Those types of accounts are generally limited only to depository banking institutions. It was outside of typical considerations for a start-up fintech like Reserve Trust to access that type of account.
Master account access for a firm like Reserve Trust gave it a sizable advantage over its competitors and was highly valuable to its investors. The Fed initially denied the firm’s master account access in June 2017, which was also about when Raskin joined its board. Raskin set about to use her connections inside the Fed regarding Reserve Trust’s application. In 2018, the Fed changed its decision and granted the company master account access.
Lummis pointed out that two fintech companies in her state have applications for access to the Fed payment system dragging on for more than a year, even though the firms have met all stringent standards.
Reserve Trust paid Raskin with stock in the company for her service on the company’s board. She sold her stock in 2020 for almost $1.5 million. Lummis observed that even in Washington, that amount is far more tremendous than ordinary reimbursement for serving on a bank board of directors.
Biden has now nominated Raskin for a position on the board of the Federal Reserve.
Lummis pointed out that Raskin has said in confirmation hearings that she was acting legally. She also mentioned that the White House had attacked her for simply bringing up questions about Raskin’s appointment and service to the Reserve Trust.
Lummis added that she is working with Sen. Pat Toomey (R-PA) on the Raskin appointment and that they intend to give the appointment the full attention it deserves as a position of public trust.