Warren, Casten press bank regulators over climate risks
Sen. Elizabeth Warren of Massachusetts and Rep. Sean Casten of Illinois are urging federal banking regulators to take “decisive action” on climate-related financial risks and accusing the agencies of thwarting a global agreement on the issue.
In a letter released Friday, the Democratic lawmakers wrote that they were “alarmed by the weaknesses” revealed in the Federal Reserve’s recent pilot program to assess how the nation’s six largest banks were looking at climate change risks.
The Fed found the banks faced a range of data gaps and modeling challenges as the institutions sought to examine the financial risks to their businesses that stem from rising global temperatures.
“These findings cast serious doubt on the preparedness of our banks and financial system for climate-related financial risks,” Warren and Casten wrote in their letter, which was signed by more than a dozen other lawmakers.
Warren and Casten also accused the banking regulators of “obstruction” of international efforts by financial regulators to reach an agreement on global financial rules that incorporate climate risk.
They cited an April report in Bloomberg that said U.S. regulators in closed-door meetings had blocked tougher international rules on climate risk.
“As we drag our feet on even recognizing and modeling the financial risk associated with climate change, our international partners are legions ahead,” the lawmakers wrote.
They demanded that the Fed and fellow regulators — the Federal Deposit Insurance (FDIC) and the Office of the Comptroller of the Currency — explain the position they’ve taken before the Basel Committee on Banking Supervision on the issue.
“We have received the letter and plan to respond,” a Fed spokesperson said. An OCC spokesperson said the agency does not comment on congressional correspondence. An FDIC spokesperson said the agency would "respond directly to the members."
Republicans, meanwhile, have pressed the Fed to eschew action on climate-related issues, accusing the central bank of overstepping its mandate.
Fed Chair Jerome Powell previously has said the Fed “will not be a climate policymaker.”
Source: E&E News