Fossil Free Finance Act Tells the Fed To Keep Up on Climate Risk

U.S. Sens. Ed Markey (D-Mass.) and Jeff Merkley (D-Ore.) today introduced the Fossil Free Finance Act, which requires the Federal Reserve to regulate financial institutions' contributions to the climate crisis. The U.S. Senate bill joins a companion version in the U.S. House, introduced by U.S. Reps. Mondaire Jones (D-N.Y.), Rashida Tlaib (D-Mich.), and Ayanna Pressley (D-Mass.), which Public Citizen endorsed and provided a detailed analysis of its provisions. Yevgeny Shrago, policy counsel with Public Citizen's climate program, released the following statement:

"The Fossil Free Finance Act sends a powerful message that Congress won't accept the Federal Reserve's failure to do its job. The contrast between the Fed and its international peers could hardly be clearer. While our European allies and others are actively exploring decarbonization, U.S. regulators are still considering how to assess banks' climate risk. The answer is clear: continued fossil fuel expansion is incompatible with avoiding climate catastrophe.

"But the Fed is turning a blind eye as Wall Street banks keep financing that industry, sowing the seeds of their own destruction in pursuit of short-term gains. If nothing changes, it's just a matter of time before the party stops and this risky gambling triggers a new financial crisis. The toxic asset this time won't be predatory subprime mortgages, it will be the literally toxic sources of greenhouse gas pollution. And the consequences will still be catastrophic for ordinary Americans, especially communities of color.

"We applaud Sen. Markey for joining Reps. Jones, Tlaib and Pressley in their leadership on recognizing the threat that the Fed's inaction on climate poses to the American economy. As President Joe Biden returns from COP26 in Glasgow seeking to reassert American leadership on climate, we hope that he'll take this bill's introduction as a call to replace current Federal Reserve Chair Jerome Powell with a leader who will start taking seriously the approach to climate risk laid out in this bill and by peers across the Atlantic."