Biden Federal Reserve pick Raskin lobbied KC Fed for fintech firm

Sarah Bloom Raskin, President Joe Biden’s pick to be the Federal Reserve’s banks regulator, called Kansas City Fed President Esther George in 2017 to advocate for a fintech company that had been denied special access to the central bank’s payments system, according to a new letter from Republican Sen. Pat Toomey.

At the time, Raskin had just joined the board of the firm, Reserve Trust. The fintech company — like many others — had hoped the Fed would grant it access to a master account.

Earlier in 2017, Raskin had left her role as the Treasury Department’s deputy secretary. Prior to her Treasury work, she spent more than three years at the Federal Reserve as one of its governors.

After Raskin’s personal intervention on behalf of Reserve Trust, the Kansas City Fed approved the company’s second request for an account in 2018.

Toomey, R-Penn., in a letter sent to the Kansas City Fed, said George herself revealed to him that Raskin made the 2017 call directly to George to advocate for Reserve Trust.

“On the evening of February 2, 2022, you and your staff spoke with my staff,” Toomey told George in his letter.

“On that you call, you revealed that Ms. Raskin had, in fact, personally called you about Reserve Trust’s master account application after it had been denied.”

The letter from Toomey, the ranking member on the Senate Banking Committee, came more than a week after Raskin was grilled by Senate Republicans during her confirmation hearing to become the next Fed vice chair for supervision, replacing Randal Quarles.

Sen. Cynthia Lummis, R-Wyo., asked Raskin several times whether she had lobbied on behalf of Reserve Trust.

Raskin repeatedly refused to answer that question at the public hearing.

She later told Toomey in a letter this week that she did not recall making any outreach on behalf of Reserve Trust to help it get approval for its master account.

But she also told him that, “Had I done so, I would have abided by all applicable ethics rules in such communications.”

Raskin, who received equity in Reserve Trust when she joined its board, sold her financial stake upon her 2019 departure from the company for about $1.5 million.

To this day, Reserve Trust’s exclusive master account remains the company’s single largest selling point to potential customers. It is the first thing the company says about itself on the homepage of its website.

“Reserve Trust is the first fintech trust company with a Federal Reserve master account,” reads the homepage for ReserveTrust.com. “We provide payments services that financial institutions and fintechs have previously only been able to obtain from correspondent and sponsor banks.”