As a longtime legislator, I know that nothing frustrates the people of Wyoming and the rest of the country as much as when connected people in Washington, D.C. use their public service to profit handsomely in the private sector.
Right now, the Senate is considering a nominee whose background looks like the dictionary definition of what we call the “revolving door.” The revolving door is a term we use when a politician or bureaucrat works for the government, then goes to the private sector and “cashes out” by using their connections and influence to make huge amounts of money in a way that no ordinary American could.
This nominee is Sarah Bloom Raskin. During the Obama administration, Raskin worked at the Federal Reserve and the Department of Treasury before leaving Treasury in 2017. Four months after she left government service, she joined the board of a Colorado-based trust company called Reserve Trust. Reserve Trust is a non-bank financial technology (“fintech”) start-up that was seeking access to the Federal Reserve’s payment system through what is called a “master account.”
Master accounts are almost exclusively limited to depository institutions, and it’s unheard of for a non-systemically important trust company to obtain a master account. A fintech non-bank company that has this access, like Reserve Trust does, has an enormous leg up on its competition and is worth a great deal of money to investors.
Having the master account isn’t the concerning part in and of itself, although trust companies often have far less capital and supervision than a bank. This is why Wyoming created the special purpose depository institution (SPDI) to bring digital assets fully into the U.S. banking system under more rigorous standards.
The concerning part is the series of events that led to Reserve Trust securing their master account. In June 2017, the Fed denied Reserve Trust access to the Fed’s banking system. Around the same time, Raskin joined the Board of Directors of Reserve Trust.
Raskin used her connections and influence and called the Fed about Reserve Trust’s denied application. One year later, in 2018, the Fed reversed course and granted this non-bank entity access to its banking system. These facts are not in dispute.
I’d like more fintech companies that are depository institutions to have access to the Fed’s payment system. Right now, Wyoming has two SPDI banks applying for master accounts, Kraken and Avanti. The Fed has dragged its feet on these applications for more than a year, even though both are banks under federal and Wyoming law and both have gone above and beyond to meet and exceed the Fed’s rigorous standards.
What’s the difference? Why did a non-bank company get access when two chartered banks have been delayed? Could it be Raskin’s revolving-door influence?
The story gets more concerning from here. Reserve Trust gave Raskin stock in the company for her service on its board. In 2020, she sold her company stock for nearly $1.5 million. The average annual reimbursement for serving on a bank’s board is far less than this. Even by Washington, D.C. standards, $1.5 million for service on a company’s board is a serious windfall of cash.
Raskin swears her actions were above board, and the White House attacked me personally for even asking these questions, but this whole situation doesn’t smell right to me, and I think the average American would agree. The White House doesn’t appear to have all the facts about its own nominee.
I’m working with Sen. Pat Toomey, R-Pa., to get to the bottom of this situation. Public service is a trust, and one that all officials should treat with the utmost respect. The federal government was created by the people to serve the people, not line the pockets of unelected bureaucrats. I know this frustrates the people of Wyoming, and I’ll keep fighting it wherever I see it.
