An Interview with Sarah Bloom Raskin

Sarah Bloom Raskin has served both as the Deputy Secretary of the U.S. Department of Treasury and as Governor of the Federal Reserve Board. As the second-in-command of the U.S. Treasury, Sarah oversaw the entire Treasury Department and its various agencies and departments. Ms. Raskin is known for her tireless pursuit of innovative solutions to enhance Americans’ shared prosperity, the resilience of the country’s critical financial infrastructure, and the defense of consumer safeguards in the financial marketplace. She was a champion of cyber security in the financial sector both nationally and internationally. Her efforts, including leading the development of the G-7 Fundamental Elements of Cybersecurity for the Financial Sector, contributed to a more secure and resilient financial sector in the face of increasingly frequent and sophisticated threats. Earlier, Sarah was a governor of the Federal Reserve Board and a member of the Federal Open Market Committee, where she helped conduct the nation’s monetary policy and promote financial stability. She also served as Commissioner of Financial Regulation for the State of Maryland from 2007 to 2010. She and her agency were responsible for regulating Maryland’s financial institutions during the height of the Great Recession.

Sarah’s public-facing work focuses on economic resilience. She has a deep understanding of the origination and management of systemic risks from diverse sources such as financial instruments, cyber breaches, and climate events. Sarah is a leading voice in understanding climate change as it pertains to the economy. Her courage was more recently evident in the letter she wrote to President Biden in which she wrote that “[a]ddressing the transition of the economy as it grapples with the effects of climate change is critical to the future of the American economy“. Her work focused on creating a climate resilient economy, includes “Climate Change and the Precautionary Imperative“ (Green Swan Conference, 2020), “Bearing Witness to the Resilience is of the American Economy; Why Climate Change Matters“ (Trinity Wall Street, 2022) and “Changing the Climate of Financial Regulation“ (Project Syndicate, 2021).

Sarah is currently the Colin W. Brown Distinguished Professor of the Practice of Law at the Duke Law School where she teaches Business Associations, Law and Financial Anxiety, and Climate change and Financial Markets. Sarah received her B.A. in economics from Amherst College and her J.D. from Harvard Law School.

Anthony Mohr:  Good afternoon, Governor Raskin. It’s good to meet with you. Let’s talk about what happens when somebody is nominated for a policy and supporting position in the federal government that requires Senate confirmation. Some call that a Plum Book position. You've been through the Senate Confirmation process before; correct?

Sarah Bloom Raskin:  You're exactly right, Tony. I have been nominated by different Presidents on three occasions. The first occasion was in 2010, to be a Federal Reserve governor. That position required Senate confirmation and resulted in a 97-3 vote on the Senate floor. In 2014 I was nominated to be the Deputy Secretary of the Treasury, which is the number two position at the United States Department of the Treasury. That also went through the Senate confirmation process. It resulted in a unanimous consent vote on the Senate floor. Most recently, I was nominated to be the Vice Chair of Supervision at the Federal Reserve Board and a member of the Federal Reserve Board of Governors. That too was a presidential appointment, and it required a Senate confirmation vote. But for that position, I withdrew.

Mohr:  When you are approached by the White House and are told, “We would like to nominate you, you're under consideration,” what happens at that point?

Raskin:  The White House needs to engage in a thorough vetting process to make sure that the person being considered for nomination is indeed a person whom the President will want to nominate. I can talk about each of my vetting processes, and there are several similarities but also some differences. Different Presidents have different White House personnel offices that engage in the vetting according to their established processes. But each vetting process consists of a number of different tracks. Typically, there is a sit-down, so to speak, with a team of people within the White House; a set of interviews; a set of discussions – all regarding your background, the things you've written, the things you are involved in, what your career has looked like, where you have traveled. In the Administrations that have nominated me, these vetting tracks have been appropriately quite extensive. Many questions are asked! Then there are a series of financial disclosures that you need to make, which include your tax statements going back as long as ten years, and how you have been compensated for your work over time.

Mohr:  Is that the form 278?

Raskin:  Yes, and then there are FBI and background checks, which are also extensive. All this is prior to the nomination. Then the committee of jurisdiction within the Senate has its own requests for documentation and information. In my cases I went through the Senate Banking Committee twice and the Senate Finance Committee one time. Each of those committees has its own set of protocols, rules and questionnaires.

Mohr:  Let's talk about the security clearance questionnaire. I know there's what's called the SF 85 and the SF 86. The 86 runs almost 120 pages. Did you have to fill out one or the other of those?

Raskin:  I completed the SF 86.

Mohr:  You got the big one. What kind of questions were in there? My understanding is they asked for foreign contacts, financial interests, foreign travel, even the medicines you take.

Raskin:  They go back in time quite a bit, and that is challenging, certainly for people like me whose prior roles required me to meet with leaders and many counterparts in many other countries. You have to recall as many of those contacts as you possibly can. You also have to do it for your spouse. There's a lot to try to recall, especially when you have roles that require hundreds of phone conversations and meetings with international counterparts.

Mohr:  Since you have a passport, can you use that to check the dates you entered and left various countries?

Raskin:  That's a good method, although it doesn't always tell you whom you met. You do have to indicate whom you met with, what day, and the purpose of the meeting. Often while people are in other countries, they might stay a day or two before or after – sometimes to get acclimated to jet lag or because they want to see the country. If you do that, you also have to disclose those days and any contacts you had on those days. Some of these rules are very particular, and you need interpretive guidance as to which contacts you actually need to report.

Mohr:  Tell me about publications and writings that they're looking for.

Raskin:  Again, different White Houses have different rules. And the Senate committees of jurisdiction each impose their own rules. In my cases, I think that the publications include everything that you've written and also include occasions when you have participated in panel discussions and have made statements to the media. Anything public that you have said can become subject to review. Trying to find, remember, and list all your public statements is quite an enormous task.

Mohr:  Let's assume that you wrote an article that was somewhat controversial. Would you have to disclose that article?

Raskin:  Depends on the time frame that's being requested. If it's within the time frame that the instruction calls for, you would. They might say, do it since the time you graduated from college or do so for the last ten years or do it for the last fifteen years. All these disclosures have different rules regarding how far back you need to look. You want to pay attention to those timing requirements, and not assume that the different disclosure forms have been harmonized.

Mohr:  How far back did they look for you?

Raskin:  The Senate Banking Committee’s questionnaire might have had a ten-year look back, and for people like me who have written quite a bit and have spoken publicly on a lot of matters, that involved a lot of materials.

Mohr:  What about social media? How do they handle that?

Raskin:  Social media postings can all be vetted. But that’s not a medium I generally have participated in. If you do engage in social media, then all your social media statements will be vetted.

Mohr:  I don’t know if this is true, but I was told that when President Obama took office, one of the questions his transition team asked was, “Have you ever emailed to anybody a joke about President Obama?”

Raskin:  You can get those kinds of questions. I’ve heard those anecdotes myself. Certainly, emails are subject to review, and this has interesting effects, because of course you want the White House to understand the kind of person you are and how you conduct yourself. And you want the Senate to understand it as well.

Mohr:  It sounds like what you would tell clients before they testify at a trial, which is to bring out all the “bad things” on direct examination; don't wait for cross.

Raskin:  I never thought of it that way. Of course, being vetted isn’t a prosecutorial affair; if the White House looks at everything they have learned about you during the vetting and decides you are not the right fit, they don’t have to go forward with the nomination. It doesn’t say that the person being vetted and considered has done something wrong – just that the President has decided not to nominate the person.

Mohr:  You worked at Arnold and Porter. That law firm has a group that offers consultation services to nominees. The group posted a lengthy description about what people should look out for and how they can help you. Did you make use of any such service outside the White House itself at any point along the way?

Raskin:  No, I didn't.

Mohr:  Were you approached by them?

Raskin:  No, I wasn’t. Again, I had gone through the vetting process several times before, so my past had been considered on several occasions. It was an open book. In addition, given my prior roles I understood the other side of the vetting process; for example, I was counsel to the Senate Banking Committee a long time ago, so I was in a position to review nominations that came through.

Mohr:  I understand that along with the public financial disclosure reports, you're asked to sign a separate “ethics pledge” committing to refraining from lobbying. Is that something you had to sign?

Raskin:  Yes. In each instance, there is an ethics disclosure and pledge that each administration requires.

Mohr:  And is hiring an undocumented person into the White House still a dealbreaker?

Raskin: Yes, I remember that question! I don’t know anymore if that’s considered what you call a dealbreaker. What constitute dealbreakers might vary with the times.

Mohr:  Do you think prior drug use, if it's limited to marijuana, would disqualify a candidate?

Raskin:  I’ve heard instances in which that question still disqualifies.

Mohr:  What happened after the White House announced your nominations? What did you do? Did you call people in the Senate, or did you wait for them to call you?

Raskin:  It's actually different for each White House and for each chairman of the relevant Senate Committee, but essentially the nomination triggers communications between the White House and the Chair of the relevant Senate committee and then the nominee.

Mohr:  By the way, is it your understanding that the White House reaches out to certain senators to test the water before they make the announcement?

Raskin:  Sometimes they do, sometimes they don't. Different White Houses have different senses as to how to do that and whether to do that, and it may depend on the nominees. Of course, it may also depend on the composition of the Senate and what the political mood is.

Mohr:  Did you have any mock hearings or rehearsal hearings with anybody before you went to the Senate? I know that that happens with judicial nominees.

Raskin:  I think they're actually quite useful. I have conducted them myself, preparing other people. People act as the various senators and ask questions as those senators might ask them through a number of sessions. The most recent occurred not just with me alone. It was done on Zoom with all the nominees to the Fed, since we were still in pandemic conditions.

Mohr:  Let's take your most recent appointment. Were you approached by staff or by the senators themselves, or did you reach out to anybody on the Banking Committee?

Raskin:  In my case, I had two nominations relevant to the Federal Reserve. The Federal Reserve acts as the liaison between the nominee and the relevant senators, so the meetings are set up between the Fed and the senators, and the Fed facilitates those meetings.

Mohr:  When you say they facilitate, was somebody from the Federal Reserve present at your meetings, and how many senators did you meet with?

Raskin:  In each case it's different. Theoretically, you should meet with all of the senators on both sides of the aisle on the relevant committee – the Democrats and the Republicans. In the two cases in which I was confirmed, I believe I met with every member of the relevant committees – the Banking Committee at the time I was nominated to the Fed, and the Senate Finance Committee at the time I was nominated for the Deputy Secretary position at the Treasury. This time, most Republican senators declined my offers to meet, deploying a political strategy. And yes, the Federal Reserve attends all facilitated meetings.

Mohr:  Does the term all-nighter mean anything to you?

Raskin:  I’m laughing at that – and the answer is yes! But first some context: It turns out that there’s another piece in the confirmation process. This piece comes after the hearing that occurs in the Senate committee of jurisdiction. In the lingo of Capitol Hill, these are Questions for the Record – or QFRs. After your hearing, the record stays open and the senators on the committee are allowed to write in questions if there are areas they want to see clarified, or if there are areas that they wanted to explore but couldn't at the hearing. That turns out to be an important part of the nomination process, because those questions can be quite detailed and technical, and you're under time pressure to complete them. In my case, in the prior instances, I received just a handful of questions that I was able to provide answers to. This most recent time, I was given around 189 questions which I needed to answer in the course of 48 hours. The Senators are supposed to submit their questions all by a certain deadline, but in my case, 130 of them came in after the deadline, so that compressed the time available, and that became extraordinarily burdensome. Hence the need for all-nighters! 

I ended up actually pulling two all-nighters. Let me say, I’m pretty attuned to doing all-nighters, both from law school days and from different international negotiations. I could hold my own when it comes to all-nighters, although I can’t vouch for my effectiveness when it comes to back-to-back all-nighters. But doing QFRs that are so voluminous and technical – and doing them under time pressure – that’s a whole new level of challenge. This became relevant in the course of my last nomination and confirmation process because, as I told you, political confirmation strategies can be deployed by senators, and these strategies include the use of QFRs .

Mohr:  Did any of the Republican senators send follow up questions to you?

Raskin:  Yes, they did.

Mohr:  Even though they wouldn't meet with you?

Raskin:  That's correct.

Mohr:  Can you give me an example of a question you might get?

Raskin:  Yes, and all questions for the record are published by the Committee so there should be good transparency. The questions vary; some are complete repeats of what you’re asked at the hearing, but others could pertain to certain academic literature that has emerged and what you might think about the question and the literature and whether you agree with it. There are questions about whether you think certain actions that have been taken by other Federal Reserve banks in the system are appropriate. There are questions regarding footnotes in various academic econometric studies. They can be all over the lot.

Mohr:  What advice would you give to a student at Harvard College, in the Kennedy School or, for that matter in any school, who's interested in a federal appointment at some point in their career? What advice would you give them at this point, besides to behave yourself?

Raskin:  I happen to think public service is one of the highest callings that you can have in a career. When the President calls to ask you to do something for your country, I think you have to step up, even if the timing is bad, even if it would represent an inconvenience. In my case, we had lost our beloved son, Tommy Raskin, in the prior year, and the timing of the President’s request didn’t come at a moment when our family was not grieving. At the same time, our democracy can’t necessarily wait for the perfect moment. It requires people to respond who are committed, who stand for things, and who are willing to serve and provide expertise to help our country. I think this moment is hard because, while we need this expertise and people who have relevant ideas, you hear that the process can be quite harsh and can be quite diversionary. There were questions, for example, that I really wanted to discuss – the intersection between climate change and the economy and why this intersection matters. In a functioning democracy, you’d like to see the confirmation process be an opportunity that helps Americans be citizens, and elaborates the nominee’s perspective on what challenges and opportunities lie ahead for our country.

Mohr:  You wrote a letter to President Biden withdrawing your nomination to be the Federal Reserve’s Vice Chair for Supervision. In your letter, you say that the Department of Defense has been analyzing energy security risks, climate change, for years. How do they do that?

Raskin:  Through the Army Corps of Engineers, the Department of Defense has attempted for many years to understand the costs associated to national security via their military bases, their equipment, any kind of personnel issues that are related and that can be affected by climate change. The Department of Defense understands migration and geopolitical consequences of climate crisis across the globe. They have been deep into the analysis of this, and they do that through the tentacles that the Department of Defense has throughout the world.

Mohr:  You wrote in your letter that the perils of climate change should be added to the list of serious risks that the Federal Reserve considers. How would the Federal Reserve do that?

Raskin:  As part of its risk management functions, the Federal Reserve categorizes risk in different ways. It looks at risk from an operational perspective, from a credit perspective, from a market perspective. There's something called the COSO Framework (Committee of Sponsoring Organizations) for risk management. There's a whole field of inquiry, a whole profession and risk management. I didn't just make up this idea of risk. This is well-embedded in the way businesses run; you do risk management and risk mitigation. There are whole rubrics and frameworks for discussing and measuring risk, and those frameworks are already used in the evaluation of credit risk and when banks are evaluated. Remember, banks are overseen by the Federal Reserve and other regulators. They use a risk management rubric to evaluate the banks. So, the idea of bringing climate into this is not at all new. It's a mere application of existing risk management frameworks.

And then there’s the econometric models used by policymakers to make projections. These models themselves need to be adapted to account for changes in the way the US economy works. I once gave a speech about the need for accurate models that reflect new distributions of income and wealth. Our economy has been through the batterings of not just climate events, but also a pandemic. Do households, businesses and fiscal spenders still reach the way the models predict?

Mohr:  Does the Federal Reserve at this point consider weather and cyber-related events?

Raskin:  They currently do risk management analysis, but the public is not aware of whether they evaluate the risk that would come from a weather-related event and the extent to which this risk would affect their ability to achieve price stability and maximum employment.

Mohr:  You wrote toward the end of the letter that you look forward to continuing to mentor a new generation in this area. In the last few months since your letter, what have you done in that area? I know you are a professor at Duke Law School.

Raskin:  I’ve redoubled my efforts with the next generation of students. As you can imagine, students were very dismayed at the results of my last nomination. It took a lot of explaining to them as to why the political realm in the Senate is so much at odds with much of the country on the understanding of climate-related financial risk. It is hard to understand why that would be a cause to block a nomination. We had discussions in that regard. My work regarding climate continues. I teach a course called Climate Change and Financial Markets. Each of the students have produced extraordinary papers in terms of creative new ideas and a fearlessness that stands up to the moment. They are looking at topics that need to be in the federal policy level. Some are of publishable quality.

Mohr:  Can you give me some examples?

Raskin:  Young people studying climate are bursting with ideas and making all sorts of important connections to the various disciplines at stake – the law, the science, finance, the economy – it’s extraordinary. I'll read you some of the titles. “Back Door Carbon Controls: A Research Agenda”  – Here is a paper about how the climate crisis represents a market failure. Carbon exacts a cost which is not borne by the emitter. So, the cost of carbon emission is a negative externality. In his telling of it, climate policy is also a political failure. I haven’t checked in with this student since the passage of the Inflation Reduction Act, but my sense is that he would say it’s a start, and that it embodies an approach that is based on tax incentives. We know there are many additional approaches that should be considered as well.

Another paper is about how we can create incentives to remove carbon dioxide. This one is of a more philosophical nature called “Carbon Pricing as a Double Movement” applying Karl Polanyi’s The Great Transformation to today's climate crisis. It’s an attempt to rephrase the climate crisis in a way that will essentially move things along politically.

Here is one that was fascinating, because it moves us into the realm of agricultural financing. It’s called “Climate Resistant Finance: Tools for Incentivizing the Transition to Sustainable Agriculture.” Here's a student who compared ESG activism that happened at BP versus what happened at Exxon. That was a discussion about the use of shareholder proxies for publicly traded companies and comparing the success of that activism from a climate perspective, using these shareholder activist methods.

So, you hear their excitement, mixed with frustration. They see obstacles on the paths for meeting the climate crisis, but they are transforming these obstacles into the path itself. They mix a sense of optimum outcomes with pragmatic effectiveness. They are reformulating the challenge in a way that creates opportunity. I find them to be infinitely effective; they are people who are looking for concerted creative and effective actions at a national and international level that can be deployed with necessary urgency.

Mohr:  How is climate change impacting our ability to recover from emergencies and shocks?

Raskin:  I gave a talk the other night about economic resilience depending on our ability to mitigate the effects of climate change. How do we bounce back from a shock? We're getting hit repeatedly and in a very dramatic, costly way. There’s a sense that our ability to bounce back from shocks as a macro economy has been reduced because we have these climate events. And we've had two major supply shocks over just the last five years. You can talk about the supply shock of the pandemic; you can talk about the supply shock coming from the Russian invasion of Ukraine. Our ability as a macro economy to move back to equilibrium is hampered because essentially, we have these supply chain blockages that keep us as a country and as a world from being able to adapt. So now, climate change is melded with energy security. We saw with the invasion that we can't seamlessly and easily alter our sources of energy, because we don't have other sources that are at the ready at the scale we need to immediately substitute into them. And while we wait to substitute into them, we’re prolonging our ability to effectively curb inflation, prolonging our inability to adapt. The quicker you can do it, the quicker your economy can rebound. If you have no good substitutes for fossil fuel and the fossil sources that have become too costly, too unreliable, too unhealthy, can you switch seamlessly into another form, into solar, into hydro, into another more durable and equitable economy? The extent to which you can do that will determine the speed with which you are recalibrating your economy towards one of inclusive prosperity. And that’s the kind of economy I’d like to see.

Mohr:  Absolutely. Even if it takes a while to recalibrate, we have to get away from fossil fuels. Thank you so much for your time.

About the Author:

Anthony J. Mohr is a 2021 Harvard Advanced Leadership Initiative Fellow and has over twenty-six years of service within the criminal and civil justice system at the state level. He most recently sat on the Superior Court of California in Los Angeles County, where he presided over civil and felony trials. Earlier, he was a judge of the Los Angeles Municipal Court, and in private legal practice. Among his numerous professional affiliations, Anthony served on the Executive Committee of the Los Angeles Superior Court and chaired both the Superior Court’s ethics review and response committee and the statewide Committee on Judicial Ethics of the California Judges Association. He serves on the Regional Board of the Anti-Defamation League’s Los Angeles Region.

This interview has been edited for length and clarity.