Sarah Bloom Raskin, President Biden's embattled pick for the Federal Reserve's top banking regulator, withdrew her nomination on Tuesday, according to a source familiar with the matter, after Republicans and one key Democrat opposed her nomination.
Her withdrawal comes one day after Sen. Joe Manchin, a Democrat who often serves as a vital swing vote in the 50-50 Senate, said that he could not support her nomination, citing her stance on energy in the era of sky-high inflation.
Biden tapped Raskin earlier this year to serve as the Fed's vice chair for supervision, a powerful role that oversees annual stress tests designed to review bank safety and liquidity. Her nomination was welcomed by progressive senators and advocacy groups, who hoped she would take a tougher stance against Wall Street than her predecessor, Randal Quarles, a Trump nominee who stepped down in late December.
In a letter to Biden obtained by the New Yorker, Raskin blamed "relentless attacks by special interests" who opposed her view that climate change could pose a threat to economic stability for derailing her nomination.
"It was — and is — my considered view that the perils of climate change must be added to the list of serious risks that the Federal Reserve considers as it works to ensure the stability and resiliency of our economy and financial system," Raskin wrote in the letter to the president.
Biden echoed that sentiment in a statement following her withdrawal, accusing GOP lawmakers as well as the oil and gas industry of lobbing "baseless attacks" at Raskin.
"Unfortunately, Senate Republicans are more focused on amplifying these false claims and protecting special interests than taking important steps toward addressing inflation and lowering costs for the American people," Biden said in a statement. He urged the Senate Banking Committee to move ahead with confirming the four other Fed picks, including the renomination of Jerome Powell as chair.
Republicans united in opposition against Raskin because of her past remarks on climate regulations. They also expressed concern over her ties to a Colorado-based fintech company, Reserve Trust, that received a Federal Reserve master account while she served on its board.
Reserve Trust is the only fintech to hold a Fed master account.
Access to Federal Reserve services is sought after by many fintechs and other nontraditional financial services companies, because there are a number of benefits, including the ability to borrow from the Fed's discount window and to earn interest from deposits at the central bank. Without a master account, nonbank financial institutions must partner with banks insured by the Federal Deposit Insurance Corp. in order to tap those services.
Reserve Trust had its master account application denied in June 2017; one year later, the application was approved. Sen. Pat Toomey, R-Pa., has noted that Raskin phoned Kansas City Fed President Esther George to advocate for the fintech company.
"Important questions about Ms. Raskin’s use of the ‘revolving door’ remain unanswered largely because of her repeated disingenuousness with the Committee," Toomey said in a statement after Republicans boycotted a key vote on her nomination in the Senate Banking Committee.
The Kansas City Fed claims that its reversal in 2018 was not the result of Raskin’s call, but rather that of Reserve Trust's changed business model "and the Colorado Division of Banking reinterpreted the state’s law in a manner that meant RTC met the definition of a depository institution," the Fed bank said last month.
Republicans did not suggest that Raskin’s actions were illegal. Rather, they consider it an example of the "revolving door" between politics and corporate interests in which former government officials use their connections and clout in government to later lobby on behalf of businesses for a payout.
Raskin, a law professor at Duke University, served on the Fed's board from 2010 to 2014 and was tapped by former President Barack Obama to serve as assistant Treasury secretary.
The end of her candidacy comes as the Fed grapples with the hottest inflation in four decades.
Senate Banking Chair Sherrod Brown, D-Ohio, had refused to separate Raskin’s nomination from Biden’s other Federal Reserve picks.
In a statement on Tuesday, he slammed Republicans for tanking Raskin's candidacy, accusing them of engaging in a "disingenuous smear campaign" that distorted her views "beyond recognition."
"Sadly, the American people will be denied a thoughtful, experienced public servant who was ready to fight inflation, stand up to Wall Street and corporate special interests, and protect our economy from foreign cyber attacks and climate change," he said.
Brown said the banking committee will proceed with a markup on the remaining nominees, including Powell, at a "criticial moment in our economic recovery" as the nation stares down sky-high inflation and a worsening war between Ukraine and Russia.
FOX Business' Edward Lawrence contributed to this report.