U.S. Federal Reserve Board Chair Jerome Powell speaks during a news conference

U.S. Federal Reserve Board Chair Jerome Powell speaks during a news conference

(Photo: Drew Angerer/Getty Images)

Fed Chair Under Fire for Blocking Climate Risk Financial Rules

"Millions of consumers, communities, and financial institutions are at the brink of a financial disaster due to climate change," warned one campaigner.

The chair of the Federal Reserve, Jerome Powell, is facing scrutiny this week for pushing back against efforts to incorporate climate risk in global financial rules.

"European central bankers have been advocating for the Basel Committee on Banking Supervision to agree on requiring lenders to disclose their strategies for meeting green commitments," according to Bloomberg. "In closed-door meetings, U.S. officials have cited their narrow mandate and concerns that the Basel Committee was overstepping its purpose."

Powell said in a Wednesday speech that "policies to address climate change are the business of elected officials and those agencies that they have charged with this responsibility. The Fed has received no such charge. We do, however, have a narrow role that relates to our responsibilities as a bank supervisor."

Anne Perrault, senior climate finance policy counsel with Public Citizen, said Friday that "millions of consumers, communities, and financial institutions are at the brink of a financial disaster due to climate change."

"U.S. Treasury Secretary Janet Yellen has described it as a significant concern for our economy and an existential threat—one that could create an uninhabitable world for our grandchildren and great-grandchildren," she added. "If Yellen's dire warning doesn't prompt action by the Fed, what will?"

Powell had to be escorted out of a speech when climate protesters came to disrupt an event in October.

"We will remain alert to the risk that there will be pressure to expand [the Fed's] role over time. We are not, nor do we seek to be, climate policymakers," Powell said Wednesday.

Powell has framed the issue as a "partisan political fight." He said the Federal Reserve doesn't want to get involved in these debates.

"Jerome Powell's latest claim that acknowledgment of the clear relationship between climate change and financial stability would make the Fed a 'climate policymaker' is outrageous," said Revolving Door Project senior researcher Kenny Stancil. "When an ostrich buries its head in the sand, potential predators do not disappear. Likewise, Powell's ostrich-informed strategy, which waves away obvious climate-related financial risk, is doomed to fail."

"The Fed's decision to carry this intransigent posture to the international standard-setting stage is a disgraceful move that threatens a true global regulatory response to the ongoing crisis," Stancil added. "The bottom line is that the abdication of responsibility by the Fed would usher the banks right into a crisis that would be disastrous for the U.S. economy. There's no reason to wait until it's too late. The time is ripe for the Fed to step up and provide enforceable rules that would protect the public and ensure stability of the U.S. financial system."

U.S. Sen. Ed Markey (D-Mass.) and Rep. Ayanna Pressley (D-Mass.) have previously pushed for the Federal Reserve to get more involved in addressing climate-related financial risks.

Join Us: News for people demanding a better world

Common Dreams is powered by optimists who believe in the power of informed and engaged citizens to ignite and enact change to make the world a better place.

We're hundreds of thousands strong, but every single supporter makes the difference.

Your contribution supports this bold media model—free, independent, and dedicated to reporting the facts every day. Stand with us in the fight for economic equality, social justice, human rights, and a more sustainable future. As a people-powered nonprofit news outlet, we cover the issues the corporate media never will. Join with us today!

Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.