Senator Patrick Toomey sounded the alarm over “mission creep” at the Federal Reserve, writing in a letter Monday of his concern about the central bank’s recent research into climate change and social issues.
The letter takes the Federal Reserve Bank of San Francisco to task for the “seemingly sudden and alarming inclusion of social research that risks being of a bitterly partisan nature.”
In the letter, Toomey demands that the Federal Reserve Bank of San Francisco turn over documents created in preparation for a recent virtual seminar on climate change and any emails or memoranda on “the impetus behind the FRBSF’s focus on climate change and/or racial justice issues.”
Toomey points out in the letter that the San Francisco Fed and other regional Fed banks “have increasingly been engaged in research on social policy topics reflective of the political and normative leanings of unelected Federal Reserve Bank officials.”
Similar to the trend toward Woke Capitalism in corporate America, Fed research suggests staffers are increasingly attracted to trendy leftwing subjects such as racial equity, gender disparities, and climate change.
Toomey says that this mission creep has brought the Fed into areas already covered by other divisions of the U.S. government.
However, FRBSF and other regional Federal Reserve Banks have written social studies essays dealing with, among other things, health insurance and essential service workers in New England (something for which we have a Department of Labor, Equal Employment Opportunity Commission, and National Labor Relations Board); the relationship between race, type of work, and Covid-19 infection rates (something for which we have a Department of Health and Human Services); overcrowded housing (something for which we have a Department of Housing and Urban Development); and guidance that people “may have privilege based on [their] racial identity, job, and other factors” and should, if they “are white, practice finding ways to center and elevate the voices and experiences of people of color, without burdening them to educate on racial equity or validate your learnings.”
While this research may be meritorious, the Federal Reserve is devoting significant federal resources to efforts that are supposed to be independent and nonpartisan. Each of the twelve regional Federal Reserve Banks has a research department, and there is often duplication of efforts among those departments. The Board of Governors of the Federal Reserve has a research department, too, as does the Federal Stability Oversight Council via the Office of Financial Research. It may be that that some of the significant amount of federal resources utilized by Federal Reserve researchers could be better directed to other federal agencies whose issues the Federal Reserve research departments seem to wish now to creep into, or could be invested in programs serving underprivileged communities.
Toomey warned Fed officials that the central bank’s independence could come into question as it pursues these emotionally-laden hot-button issues.
The Senator also pointed out that the focus on racial justice and climate change was taking the Fed regional banks beyond their statutory mandate.
“The Federal Reserve may pursue mission creep or welcome itself to political capture. But such activities are inconsistent with its statutory responsibilities; only Congress has the authority to reform the Federal Reserve or modify its mission,” Toomey wrote.