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US Senate confirms Wall Street critic as Treasury No. 2

Sarah Bloom Raskin
Andrew Harrer | Bloomberg | Getty Images
Sarah Bloom Raskin

The U.S. Senate on Wednesday approved Federal Reserve Governor Sarah Bloom Raskin to be the No. 2 official at the Treasury Department, backing a critic of Wall Street to help coordinate an overhaul of financial regulations.

The Senate approved the nomination by voice vote.

Raskin, who was a state banking supervisor before she joined the Fed, is expected to play a central role in the roll-out of regulations aimed at preventing a repeat of the 2007-09 financial crisis.

Her departure from the central bank opens yet another seat on the Fed's board for President Barack Obama to fill. Obama on Jan. 10 nominated former Bank of Israel Governor Stanley Fischer to serve as vice chairman and two others for regular board seats.

The Treasury declined to make Raskin available for an interview ahead of her confirmation, but in the past she has been an outspoken critic of some of modern finance's favorite ideas and pastimes.

For one, she disdains the practice of big banks making financial market bets to chase a profit, rather than only trading on the behalf of clients.

Raskin has argued the huge sums of cash that this proprietary trading pumps into markets is destabilizing because it makes risky bets appear less so, and could trigger sharp price drops when markets turn south. The orthodox view held by financiers—that large amounts of liquidity always create a more efficient market—is wrong, she has said.

"Price discovery actually is impeded by this hyper-liquidity,'' Raskin said in a July 2012 speech in which she criticized big banks for seeking quick profits. "Liquidity is not an inherent public benefit.''

--By Reuters

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