Public Citizen applauds the reintroduction of the Fossil Free Finance Act
WASHINGTON, D.C. — Senator Edward J. Markey (D-Mass.) and Representatives Ayanna Pressley (D-Mass.) and Rashida Tlaib (D-Mich.) today reintroduced the Fossil Free Finance Act, legislation requiring the Federal Reserve to address the systemic risk that climate change and the energy transition present to our financial system.
Under the legislation, the Fed would have to use its existing powers to mandate that the biggest banks stop financing the climate crisis and instead lend and invest responsibly, in line with science-based emissions goals that would keep global warming within the 1.5°C threshold set forth by the Paris Agreement.
“The recent banking crisis illustrates that banks need strong oversight, and bank regulators have failed to address obvious risks in plain sight,” said David Arkush, director of Public Citizen’s Climate Program. “This is certainly true of climate-related financial risk, which regulators have acknowledged but are moving too slowly to address. At present, the Fed is allowing the largest U.S. banks to threaten the financial system and flout their own public climate commitments by recklessly inflating a massive carbon bubble and fueling the climate crisis. Senator Markey and Reps. Pressley and Tlaib’s legislation would jump-start genuine oversight by requiring the Fed to align big banks’ financing with the realities of the climate crisis and our rapidly changing economy.”
The bill, reintroduced at a press conference outside the U.S. Senate today, would require the Federal Reserve to prohibit financing of new or expanded fossil fuel projects immediately, any thermal coal financing after 2024, and all fossil fuel financing after 2030. In addition, banks would be required to reduce their financed emissions 50% by 2030 and reach zero emissions by 2050.
Since the bill was first introduced in 2021, federal bank regulators, including the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, have begun to roll out limited regulatory frameworks to address the harm of climate change on the financial system. Regulators outside the United States have acknowledged the role of transition plans for managing bank climate risk.
“Wall Street banks have failed to live up to their own climate commitments by providing billions of dollars to new fossil fuel projects,” said Ben Jealous, executive director of the Sierra Club. “Without strong federal oversight and regulation, these banks will only continue pouring money into the fossil fuel expansion driving the climate crisis, taking on excessive risk and threatening to destabilize the entire economy. So far, financial regulators have failed to rein in Wall Street’s reckless behavior. We applaud Sen. Markey and Rep. Pressley for their leadership in protecting our financial system from a climate-driven financial crash.”
“Big Banks have long been propping up polluters over people,” said Tanya Clay House, executive vice president for the Hip Hop Caucus. “Bailouts to banks and the fossil fuel industry persist while everyday people in frontline communities are left holding the bag. The Fossil Free Finance Act is an important step toward eradicating the disproportionate impacts of climate change on Black, Brown and Indigenous communities. Cutting off the flow of money toward destructive, extractive industries would help stop projects like Willow and Keystone XL before they ever get off the ground, lifting organized people over organized money.”
“Despite numerous warnings about the risks climate change poses to consumer finances and the economy, too many Wall Street banks have only been adding fuel to the fire,” said Mike Litt, consumer campaign director, U.S. PIRG. “The longer banks continue to finance dirty fossil fuel projects, the more lives, homes and communities will be lost to or damaged by extreme weather. The Fossil Free Finance Act is just what we need to make large banks finally take climate-related financial risks seriously. This act would help us get and stay on the course that science indicates is necessary to stave off climate disaster for current and future generations.”
“Wall Street banks have time and again shied away from their climate commitments, proving they have no intention to stop financing harmful and risky fossil fuel projects,” said Akiksha Chatterji, lead campaigner at Positive Money US. “These banks are hurtling our economy towards a climate-fueled crash and unless regulators step up to rein in their reckless behavior, the most vulnerable communities will be left to foot the bill. The Federal Reserve has been dragging its feet on climate for too long. The longer we wait, the greater the risk. The Fossil Free Finance Act might be exactly what we need to get the Fed up to speed, to protect our economy and our communities from Wall Street’s exploits.”