Democratic lawmakers urge Fed to do more on climate change

The Federal Reserve needs to implement measures to adequately address climate-related financial risk as its current efforts “fall short in responding to the current climate crisis,” a group of 11 Democratic lawmakers said today. In a letter to Fed Chairman Jerome Powell, the lawmakers said climate-related weather disasters cost the U.S. economy more than $617 billion between 2018 and 2022, but they criticized the Fed for allegedly being far behind other G20 central banks in adopting environmentally friendly policies and initiatives. Signatories include Sens. Ed Markey (D-Mass.), Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.), as well as House members such as Rep. Ayanna Pressley (D-Mass.).

“The Federal Reserve has acknowledged that climate change poses an emerging risk to the safety and soundness of financial institutions and the financial stability of the United States,” the lawmakers said. “That is why we urge the Federal Reserve to use its existing authority to oversee bank safety and mitigate risks to financial stability, and require financial institutions to submit and execute plans to align their activities with science-based climate targets, including reducing financed emissions.”

In a speech earlier this year, Powell said the Fed has “narrow, but important, responsibilities” regarding climate-related financial risks, but he pushed back against calls for the central bank to become a broader climate regulator. “Decisions about policies to directly address climate change should be made by the elected branches of government and thus reflect the public’s will as expressed through elections,” he said.