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President Joe Biden’s three latest picks for the Federal Reserve board are headed to Capitol Hill today for their nomination hearing, where the theme is likely to be an existential one: What is the job of the central bank?

Republicans have blasted two of the president’s nominees, Sarah Bloom Raskin and Lisa Cook, as activists who would stretch and push the bounds of the Fed’s congressional mandate to advance the administration’s social and environmental agenda. Raskin and Cook’s supporters insist this is nonsense and argue that the two candidates would bring a different and urgent perspective on the Fed’s role in advancing economic opportunity and stability.

The crux of the issue is, how far would they go?

Activists who have bemoaned what they see as Chair Jay Powell’s baby steps on climate have said that Raskin would take bigger steps — leaps maybe — to incorporate climate risks into the Fed’s work. But her defenders say she’s not the radical Republicans portray, noting the Fed has already started moving in this direction under Powell. The GOP isn’t buying it.

“I’m very concerned about any candidate that would go beyond what I see as the limited mandate of the Federal Reserve,” Sen. Bill Hagerty (R-Tenn.) told our Victoria Guida on Tuesday.

Thursday’s hearing will be a chance for Raskin and Cook to clarify their views on how much power the Fed has, for example, to steer banks away from fossil fuel investments or address racial disparities in the economy.

Here’s more from POLITICO climate reporter Zack Colman on Raskin:

Raskin has joined other financial and climate experts in calling on banks to prepare for climate-related shocks and has encouraged regulators to consider ways to support a “rapid and just green transition.” The dangers most closely watched by the Fed include not only physical risks posed by severe weather but also the possibility that global policies enacted to curb greenhouse gases could hurt financial institutions with sizable fossil fuel investments.

Environmentalists say Raskin is generally aligned with Powell and former vice chair Randal Quarles, both Trump appointees. Under Powell, the Fed has joined the Network for the Greening of the Financial System, a coalition of central banks assessing climate risks, and is in the process of developing a framework for making banks game out climate-related risk scenarios.

And, in fact, the U.S. is a laggard on preparing for climate risk compared with the European Union, said Ben Cushing, campaign manager with the Sierra Club’s fossil-free finance program.

“There’s been a lot of this being politicized, but really the Fed is already moving in this direction,” said Sarah Dougherty, a former Fed economist who now directs the Natural Resources Defense Council’s Green Finance Center.

But Republicans and some Democrats say Powell has been more muted on climate than they assume Raskin would be; indeed, the Fed chief has been the target of withering criticism by activists for not doing more. Powell said at his confirmation hearing last month that the Fed’s climate role is “limited.”

“Jay Powell has never talked about allocating capital and steering capital away from the oil and gas sector,” a GOP Banking Committee aide told POLITICO. Raskin “wrote that these companies will be worthless in the near future, which would be news to anyone who bought Exxon Mobil stock in March.”

Republicans also question whether the Fed or banks could adequately model climate risk scenarios. And they have slammed Raskin as an ideologue who would halt cash flows to coal, oil and gas firms, though such an extreme move is highly unlikely, particularly in the near term.

Taxpayer watchdogs said opponents have distorted Raskin’s statements, particularly her criticism of the Fed’s pandemic lending programs, which stemmed from concerns that the Fed was making risky taxpayer investments. And they’re also touting her credentials in other areas, such as cybersecurity, to parry Republican attacks.

FIRST IN MM: BROWN’S OPENING STATEMENT — Senate Banking Chair Sherrod Brown (D-Ohio) plans to emphasize today the importance of having a Fed board at full strength, according to excerpts of his opening statement obtained by MM:

“It’s been almost a decade since we’ve had all seven board members. That’s what makes this so urgent. Governor Bloom Raskin, Dr. Cook, and Dr. Jefferson are the proven leaders we need at this critical moment. These three experienced public servants understand the importance of empowering workers through full employment, and the need to combat inflation so paychecks go farther.”

On Raskin: “No one is better equipped than Ms. Raskin to protect Americans from risks that could bring down financial markets and institutions and wreck people’s savings — from cybersecurity threats to climate financial risk…She understands that we need to think about all the financial risks our economy faces — including the possible economic impact of severe weather and climate change. As we heard from Chair Powell, this is a priority for the Fed.”

On Cook and Jefferson: “They are highly respected and experienced economists with sterling credentials. They understand how monetary policy can contribute to our economic growth and strengthen our economy for everyone…”

Fourth-quarter productivity and weekly jobless claims data released at 8:30 a.m. … Senate Banking hearing on nominations of Raskin, Cook and Jefferson to the Fed at 8:45 a.m. … House Financial Services subcommittee hearing on financial barriers to women- and minority-owned businesses at 10 a.m. … Bipartisan Policy Center virtual discussion with FDIC Chair Jelena McWilliams at 2 p.m.

BIDEN NOMINEE ENSNARED IN DEBATE OVER ‘WOKE’ FED — Our Victoria Guida: “President Joe Biden’s nomination of Lisa Cook to become the first Black woman to serve on the Federal Reserve Board has drawn sharp resistance from Republicans over her views and ignited a broader debate over the central bank’s role in fighting racial inequality. Cook, a Michigan State University professor who has long explored the impact of racial injustice on the economy, has become a flashpoint for Republican complaints about the Fed and its growing research on race-related trends.

BEHNAM TO TESTIFY ON DIGITAL ASSETS — Our Sam Sutton: “CFTC Chair Rostin Behnam will testify at a Senate Agriculture hearing next week on his agency’s oversight of digital asset markets, according to two officials with knowledge of the hearing. The Feb. 9 hearing is expected to cover the House and Senate Agriculture committees' request for more information about what powers Behnam’s agency needs to crack down on abuses in volatile cryptocurrency markets.”

SEC SUSPENDED INTERNAL WATCHDOG FOR 7 DAYS AFTER MISCONDUCT FINDING-RECORDS — Reuters’ Chris Prentice and Sarah N. Lynch: “The U.S. Securities and Exchange Commission (SEC) suspended its inspector general Carl Hoecker for seven days without pay in 2020, despite an independent government committee recommending that the agency consider firing him for ‘serious misconduct,’ according to government records obtained by Reuters.

“The SEC documents provide new details on how the agency responded after a government investigation, first reported by Reuters in December, concluded that Hoecker abused his authority by conducting a ‘remarkably biased and flawed’ internal probe into allegations against two of his employees.”

YELLEN PUTS INFLATION BLAME ELSEWHERE, DEFENDS BIDEN STIMULUS — Bloomberg’s Christopher Condon: “U.S. Treasury Secretary Janet Yellen defended the size of the Biden administration’s stimulus package that many blame for fueling the fastest inflation in four decades, though she conceded that describing rising prices as ‘transitory’ was a mistake.

“‘You have to decide what’s the biggest risk that you face, and address it effectively,’ Yellen said in an interview Wednesday with Bloomberg News. ‘The American Rescue Plan was sized to do that, and it accomplished that mission.’”

BIDEN’S THREE FED BOARD NOMINEES ALL VOW TO TACKLE INFLATION — Bloomberg’s Craig Torres: “All three of President Joe Biden’s nominees to join the Federal Reserve said they placed a high priority on tackling U.S. inflation, which is currently running at the hottest pace in almost 40 years. In prepared remarks released on Wednesday, on the eve of their confirmation hearing before the Senate Banking Committee, Philip Jefferson, Lisa Cook, and Sarah Bloom Raskin acknowledged the cost that high inflation imposes on American families.”

— Raskin also plans to tell lawmakers she does not believe the role includes telling banks where they should be lending, Reuters’ Pete Schroeder reported.

BIDEN NOMINEE FACES SCRUTINY OVER FINTECH WORK — The Hill’s Alexander Bolton: “Sarah Bloom Raskin, President Biden’s nominee to serve as vice chair of supervision at the Federal Reserve, is expected to get some tough questions at a Thursday confirmation hearing over her work for Reserve Trust, a non-bank financial technology company that received special access to the Fed’s payments system while she was serving as a director. Reserve Trust, a Colorado chartered trust company, is the only non-bank fintech company to have a Fed master account.”

AS FED FIGHTS INFLATION, ‘DOVISH’ MAY NOT DEFINE BIDEN’S NEWEST NOMINEES — Reuters’ Ann Saphir and Howard Schneider: “In the summer of 2005, Philip Jefferson spent several weeks learning from fellow Swarthmore College professor Amy Vollmer how to genetically engineer bacteria to resist antibiotics, an unusual interlude for a tenured economics professor. He says his brief foray into her field gave him fresh ideas for teaching in his own discipline; years later, Vollmer says, he told her it was one of the best things he had ever done. Jefferson, now dean of faculty at Davidson College in North Carolina, is poised to again push boundaries after being picked by U.S. President Joe Biden to join the Federal Reserve Board, which runs the central bank of the world's biggest economy.”

Big money is back on Wall Street: Not since the late 2000s, when lavish bonuses rained down before and after federal bailouts, have pay packages at U.S. investment banks swelled as much as they have right now, Bloomberg’s Sridhar Natarajan and Hannah Levitt report.

Eurozone inflation soars: Consumer prices in the eurozone rose by a record 5.1 percentin January piling more pressure on the European Central Bank to respond with tighter monetary policy, the FT’s Martin Arnold reported.

From the blockchain to the wall: Art collectors and cryptocurrency investors went wild last year buying art that exists only in the digital world. As it turns out, those adventurous enough to buy the most cutting-edge digital media still crave some kind of real-world way to show it off at home, WSJ’s Kelly Crow reports.

Why are oil prices so high? And will they stay that way? NYT’s Clifford Krauss explains why geopolitical tensions and a growing disparity between supply and demand have driven up prices, and what could happen next.