Senate Finance on Nominations of Sarah Raskin and Rhonda Schmidtlein

At November 20th’s nomination hearing, the Senate Finance Committee met to consider former
Federal Reserve governor, Sarah Bloom Raskin, to be Deputy Secretary of the
Treasury, and Rhonda Schmidtlein, to be a Member of the United States
International Trade Commission (ITC) for a term expiring December 16, 2021.


his opening
, Chairman Max Baucus (D-Mont.) said both nominees are well
qualified and extraordinary public servants, and noted that Raskin, if
confirmed, will become the highest ranking woman in the history of the Treasury

on the broader economy and economic development, Baucus called the current
unemployment rate “far too high.” A day after releasing his international tax
reform discussion draft, Baucus said the Treasury Department will need to be
ready to act when the time comes to implement sound tax reform policy. Baucus
said he appreciated Treasury Secretary Jack Lew’s comments yesterday in support
of tax reform.

trade policy, Baucus said the US is at a “pivotal stage with our trade agenda” and
he hoped Schmidtlein and the rest of the ITC would continue to provide Congress
with high-quality, timely advice to advance the US trade agenda. The Chairman
noted how the US is currently negotiating trade deals covering two-thirds of
global GDP and that the ITC provides Congress with the facts needed to make
sure each trade deal works for American families and workers.

Member Orrin Hatch (R-Utah) said
Raskin’s move to the Treasury Department is interesting in that she is moving
from the monetary to the fiscal sphere.  Hatch expressed concern in his
remarks regarding the Federal Reserve’s shift into “the sphere of fiscal
policy” and how the Administration, Treasury, and some in Congress seem content
to outsource decision-making to the Fed regarding fiscal policy matters.

the interplay between monetary and fiscal policy, “and some dangerous overlaps,
I hear conflicting stories,” Hatch said. While Treasury and Fed officials have
told Hatch that they are independent, “I see the Fed and Treasury acting
jointly, as when Fed officials publicly state that they are helping the
government lower its financing costs, which is making debt-fueled government
spending look artificially cheap.” Hatch urged Raskin to work with the
Committee to improve communication and transparency efforts between Congress
and the Treasury.

Schmidtlein’s nomination, Hatch said she would have a voice in shaping ITC’s
future, including the Section 337 process, which is a “vital tool” for US
companies facing unfair competition from foreign imports. Hatch said it is in
his interest to make sure the process operates “as effectively as possible.”


in her testimony,
said her previous experience has taught her that the financial marketplace
seeks the following from the government: “stability; predictability; fairness;
a sense of proportion; attention to the unintended consequences of regulation;
pragmatism; and bipartisan effort towards economic prosperity and public
efficiency.”   She also noted that in her role as Commissioner of
Financial Regulation for the State of Maryland she “took action to revise and
replace ineffective and counterproductive state regulations in order to enhance
economic progress, regulatory effectiveness, and access to affordable credit.”

concluded that, if confirmed, she would work to achieve progress on housing
finance reform, financial regulatory reform, trade agreements, as well as tax
and entitlement reform.

in her testimony,
stated that the ITC plays an important role in the U.S. economy through its
administration of trade remedy laws including Section 337 and that the ITC’s
decisions can “impact the livelihoods of workers, farmers and businesses across
America.”  She concluded that a rules-based trading system can expand trade,
create jobs, and raise standards of living. She added that, if confirmed, she
would work “to ensure that the ITC continues to be responsive to Congress and
other policymakers, and continues to provide objective and high-quality

and Answer

began the discussion by asking Raskin what was the biggest lesson she learned
during her time at the Fed and what can be done to prevent another financial
crisis from occurring again. Raskin replied that seeing the effects of the
crisis on communities were “searing experiences” and said she will commit
herself to “not let this happen again.”  She added that the Dodd-Frank Act
is a “comprehensive statute” and that the work being done under this Act will
bring the country to a “place of greater financial stability.”

then urged Raskin to “keep an eye” on tax reform, stating that it can help with
economic growth. He then asked Schmidtlein how the ITC can speed up its trade
policy review process, noting that the Commission has told him that it will
take 150 days to create a report on the Transatlantic Trade and Investment
Partnership (TTIP) or the Trans-Pacific Partnership (TPP) rather than the
usually 90 days the Committee requires.  Schmidtlein said that she would
work to understand why this delay exists and ensure appropriate resources are
dedicated to creating the report.

Hatch asked about the “extraordinary measures” taken by the Treasury to avoid
reaching the debt limit, saying they are becoming “all too ordinary,” and asked
Raskin if she would reply to his request for information about cash balances
and the “room” created by the measures to delay reaching the limit. Raskin
replied that the work regarding the information leading up to a government
default is critically important to have accurate. 

then asked if Raskin would work to improve the transparency of the Financial
Stability Oversight Council (FSOC), to which she said that she is committed to
the important goal of transparency.

Chuck Grassley (R-Iowa) expressed concern with Attorney General Eric Holders
remarks at a previous Senate Judiciary Committee hearing regarding criminal
charges against financial institutions and the effects on the financial system,
saying that an environment where “you can get away with doing bad things,
brings about more risk.”  Raskin replied that she “appreciate[s] a focus
on accountability” and that during her time at the Fed she was able to look
“from the outside” at settlements and potential consequences to financial

Benjamin Cardin (D-Md.) stated that “we are under attack on remedy laws” as
some U.S. trading partners and multinational companies are working to weaken
them. He then asked Schmidtlein if she would be willing to work with Congress
to make these regulations more effective, to which she replied, “yes, of

then expressed concern with the low level of retirement savings in the U.S.
over the years and asked if the Treasury would work with Congress to provide
tools for Americans to save more. Raskin replied that savings are an “important
component to our long term sustainability and long term growth” and that she
looks forward to working with Congress on their proposals to address this need.

asked by Cardin for her views on currency manipulation, Raskin said it is a
“very important issue that requires continued diligence” and that it is
important to get international relationships “right” and “move toward a more
market based set of exchange rates.”

Sherrod Brown (D-Ohio) stated that there is a “bias in our government towards
financial services at the expense of manufacturing” and asked if the ITC would
look into the economic impact of trade agreements on communities due to the
loss of manufacturing jobs. Schmidtlein stated that it is the ITC’s statutory
responsibly to provide these types of reports and that, if confirmed, she would
commit to looking at the full range of how trade issues impact people in the

Robert Menendez (D-N.J.) stated that the Administration’s investment plan calls
for reforms to the Foreign Investment in Real Property Tax Act (FIRPTA) to
increase investment in the US by decreasing barriers for foreigners to invest
in the U.S. and asked “what are we waiting for.”  Raskin replied that she
has not “become skilled in the nuances” of this Act but that she “supports the
goals of what it would do” and would work to create a focus on this issue at
the Treasury.

then expressed concern about a “one size fits all” set of capital requirements
being imposed on insurance companies deemed systemically important, saying that
their different business model from banks would make these rules a challenge.
Raskin replied that a “one size fits all” approach “will not work here” and
noted that the Fed “has not gone ahead and pushed” toward regulation insurance
companies in the same way they regulate banks.

then asked Schmidtlein if she will pursue intellectual property infringement
violations, to which she replied “I intend to strictly enforce the laws” if
cases show infringement of property rights.

Ron Wyden (D-Ore.) asked Raskin how she would help bring people together on
pro-growth tax reform and address the problem of underemployment.  Raskin
responded that she “applaud[s] the focus on pro-growth tax reform” and that it
is her “instinct that a simpler code and one that essentially address issues
regarding competitiveness could do a lot toward increasing growth.”


more information on this hearing and to view a webcast, please click here.