WASHINGTON, D.C. – The Federal Reserve Board, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation today issued interagency Principles for Climate-Related Financial Risk Management for Large Financial Institutions, marking the first major step by U.S. banking regulators toward protecting the banking system and economy from climate-related financial risk. In response, David Arkush, director of Public Citizen’s Climate Program issued the following statement:
“These principles have taken far too long to produce, but they are a solid start. Banking regulators should work to implement them by training examiners and having supervisory conversations with banks to assess their compliance. They should also move swiftly to provide more detailed guidance on several issues, including scenario analysis, how to design credible strategies to meet public net zero commitments, the need for a margin of conservatism when assessing multiple types of risk, and how to meet fair lending obligations while mitigating climate-related financial risks that disproportionately affect low- and moderate-income communities.
“This year’s bank failures, shortly before the 15th anniversary of the 2008 financial crisis, were a stark reminder that financial regulators have a long record of waiting until after disaster strikes to take necessary action. If banking regulators and the Financial Stability Oversight Council pick up the pace, they might still prevent climate-related financial crises.”
- Climate Roadmap for U.S. Financial Regulation
- May 2021: Unsafe at Any Charge: Why Financial Regulators Should Actively Mitigate Climate-Related Risk
- June 2022: Looking Over the Horizon: The Case for Prioritizing Climate-Related Risk Supervision of Banks
- Feb 2023: Supervising the Transition: How Banking Regulators Can Address the Coming Shift to Net-Zero Emissions
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