U.S. Sen. Pat Toomey (R-PA) speaks during a Senate Banking, Housing, and Urban Affairs Committee nomination hearing on Capitol Hill in Washington, U.S. (Photo : Alex Wong/Pool via REUTERS/File Photo)
Republican Senator Pat Toomey on Monday opened an inquiry into "mission creep" at the U.S. central bank's 12 regional outposts, beginning with a letter demanding information on the Federal Reserve Bank of San Francisco's research into climate economics.
"A sizable portion of FRBSF research appears to be focused on how matters unrelated to monetary policy impact narrow subgroups of people," Toomey wrote in a letter to San Francisco Fed chief Mary Daly, which he released publicly along with a statement announcing the start of a broader review.
Toomey demanded a briefing from the bank's policy advisor and documents relating to its climate research agenda and spending "in light of the FRBSF's seemingly sudden and alarming inclusion of social research that risks being of a bitterly partisan nature."
Over the last few years, the Fed has ramped up research into climate change, racial inequality and other topics traditionally seen as outside of the central bank's purview.
Fed policymakers have repeatedly defended their research into income inequality, climate change and other topics, saying it is critical to their ability to understand the economy, conduct appropriate monetary policy, and ensure the safety and soundness of the banking system.
"It is early days, but we feel like we have a responsibility to start the process of understanding," Fed Chair Jerome Powell told lawmakers in testimony last week in response to questions about the Fed's attention to climate risks and how banks handle them. "We don't have a new mandate: this is consistent with our existing mandate of supervision of financial institutions," he said.
Republicans like Toomey see this trend as evidence the Fed is adopting a social agenda embraced by Democrats, or as an attempt to use central bank authority to implement a climate-driven policy agenda.
In his letter to Daly, Toomey suggested such "mission creep" saps attention from the Fed's mandated focus on employment and inflation, and suggested federal resources may be "better directed" to other federal agencies or programs.
Toomey had not so far sent similar letters to other Fed banks. But the letter to the San Francisco Fed, which points to "social studies essays" on the economic impact of inequities in race, health insurance and housing penned by economists at the Boston, Minneapolis, and Chicago Fed banks, suggests other Fed banks are also in his sights.
