The Senate GOP alleges that Sarah Bloom Raskin, Biden's Fed nominee, leveraged government connections to aid a financial technology company.

• Republicans in the Senate accused Sarah Bloom Raskin of leveraging her former government position to aid a company she sat on the board of in obtaining exclusive access to the Federal Reserve's payment system.
• Biden has nominated Raskin for the Federal Reserve's top bank supervisory position.
• Cynthia Lummis repeatedly asked Raskin if he contacted the Federal Reserve on behalf of Reserve Trust after he joined its board, but Raskin consistently declined to answer.
• In early February, Sen. Pat Toomey, R-Pa., sent a letter to the Kansas City Fed requesting information about Raskin's alleged calls to the Fed bank in 2017, according to a Senate Republican aide who spoke to CNBC.

On Thursday, Senate Republicans claimed that Sarah Bloom Raskin, President Joe Biden's nominee for the Federal Reserve's top bank supervisory post, utilized her former government status in 2017 to aid a company she sat on the board of in obtaining special access to the Fed's payments system.

Lummis claimed that Raskin, who testified before the Senate Banking Committee, made a call to the Kansas City Regional Federal Reserve on behalf of Reserve Trust after joining its board. However, Raskin repeatedly declined to answer questions about this matter.

In early February, Sen. Pat Toomey, a Pennsylvania Republican and the committee's ranking member, sent a letter to the Kansas City Fed requesting information about Raskin's alleged calls to the regional Fed bank in 2017.

A Fed official confirmed that Raskin made a phone call to the Kansas City Fed on behalf of Reserve Trust's master account application, as stated by the aide.

When contacted by CNBC, a spokesperson for the Kansas City Fed chose not to provide a comment.

Sarah Bloom Raskin has consistently prioritized her ethical responsibilities while serving in the public sector.

The White House stated that she complied with ethics requirements during her nomination, as she had done in the previous two confirmations by the Senate, by working with career officials at the Federal Reserve and the Office of Government Ethics.

Senator Lummis made baseless claims without providing any evidence to support them. If Senator Lummis had any evidence to back up her claims, she would have presented it at the hearing, the spokesperson stated.

Lummis did not accuse Raskin of breaking the law, but rather suggested that she used her influence from her previous government positions to gain an advantage in the corporate world, which is commonly known as a "revolving door" between politics and corporate interests.

While Kathleen Clark, a law professor at Washington University in St. Louis, stated that Bloom Raskin did not break the law, the public is raising concerns about the "revolving door" and whether the legal restrictions are strict enough.

Clark added that Lummis is raising the question of whether a competitor financial institution is disadvantaged because they didn't have access to Bloom Raskin on their board.

Raskin served as a Federal Reserve governor for four years and then as a deputy secretary at the Treasury Department before joining the board of Reserve Trust, a financial technology payments company, in May 2017.

A month after submitting its first application, Reserve Trust was denied a Federal Reserve master account.

Fed master accounts have long been sought by fintech firms like Reserve Trust, enabling direct access to the Fed's payment systems and the ability to settle transactions with other participants through the central bank.

To indirectly access the Fed's payment services, most nonbank fintechs, including Reserve Trust, must partner with banks insured by the FDIC.

John Milikowsky, a San Diego-based tax attorney, wrote Thursday afternoon that Reserve Trust, a Special Purpose Depository Institution (SPDI), is seeking access to the Federal Reserve's payment system to conduct financial transactions like a bank but without the stringent regulations that larger banks are subject to.

Reserve Trust did not immediately respond to a voice message seeking comment.

Lummis grills Raskin

In August 2017, Raskin contacted the Kansas City Regional Federal Bank regarding the denial of Reserve Trust's master account application, which had occurred two months prior.

In 2018, Lummis announced that Reserve Trust was granted a Fed master account.

According to Lummis, there is only one state-chartered trust company with a Fed master account.

Reserve Trust, a start-up based in Colorado, was established in 2016, according to Lummis.

The senator stated that the Fed master account of Reserve Trust is valuable, as the company has frequently emphasized its benefits.

In 2021, one of the company's investors emphasized that Reserve Trust has a master account at the Federal Reserve and direct access to the payment rails, making it the only fintech company in the country with such an account.

Wyoming's SPDI charter has been under review for over two and a half years, despite the failure of dozens of fintech companies to succeed.

Did you communicate with the Federal Reserve about Reserve Trust's application after it was denied? Lummis inquired of Raskin.

From 2017 to 2019, Raskin served on the board of directors of that company.

Did you contact the Federal Reserve regarding Reserve Trust's application for a master account in 2018?

Raskin again refused to answer that question.

Raskin stated, "If you are implying anything inappropriate, I want to clarify that I have served in various public capacities and have always been mindful of the rules regarding departure each time I left."

Raskin was questioned by Lummis for the third time, with Lummis confirming that Raskin had contacted the Kansas City Fed in August 2017.

Did you communicate with the Board of Governors about Reserve Trust's application after being appointed to their board and their subsequent acquisition of a master account? Lummis inquired.

Before Lummis interrupted, Raskin assured that he had been highly focused. When Lummis asked, "Well, who did you communicate with?", Raskin replied.

Raskin stated, "To clarify, the Federal Reserve has granted numerous master accounts."

Lummis said, “But not in fintech.”

Lummis pointed out that Amias Gerety, a former acting assistant secretary at the Treasury Department, held the position while Raskin was deputy secretary at Treasury. Gerety is also a partner at QED Investors, which currently owns Reserve Trust, Lummis stated.

In 2020, QED Investors bought the 195,000 Reserve Trust shares that Lummis received upon joining the board in 2017 for nearly $1.5 million. This is a significant amount of money for serving on a company's board of directors for just two years.

The senator summarized: "After leaving the Treasury, you served on the Reserve Trust board for two years. Your initial application for a master account was denied, but after the rejection, you contacted the Federal Reserve, resulting in the Reserve Trust receiving a Fed master account - the only state-chartered trust company to obtain one. As a result, you earned a million and a half dollars."

My state's companies and constituents have been hindered from obtaining approval for master accounts, despite working with the Fed for two and a half years on specific guidelines.

— CNBC’s Michael Bloom contributed reporting.