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As Planet Burns, US Banking Agencies Ditch Climate Risk Rules
Federal Reserve Chair Jerome Powell recently warned that due to climate disasters, "there will be regions of the country where you can’t get a mortgage, there won’t be ATMs, banks won’t have branches."
Oct 17, 2025
Federal regulators have rescinded a set of guidelines for large banking institutions to consider the financial dangers of the climate crisis when making decisions about business strategy, risk management, and strategic planning.
On Thursday, the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and the Federal Reserve Board announced that they would immediately withdraw their interagency Principles for Climate-Related Financial Risk Management for Large Financial Institutions, a framework that required financial institutions with $100 billion or more in assets to consider climate risks.
The guidelines were first issued in 2023, which was, at the time, the hottest year on record. That year, the US experienced a record number of weather and climate-related disasters—including a massive drought across the south and Midwest, historic wildfires in Hawaii, and major flooding events across the country—that caused at least $92 billion worth of damage.
In October of that year, Federal Reserve chair Jerome Powell said: "Banks need to understand, and appropriately manage, their material risks, including the financial risks of climate change."
The OCC, meanwhile, explained that "financial institutions are likely to be affected by both the physical risks and transition risks associated with climate change." This included both the risks to the safety of people and property "from acute, climate-related events, such as hurricanes, wildfires, floods, and heatwaves, and chronic shifts in climate," as well as changes due to "shifts in policy... that would be part of a transition to a lower carbon economy."
But these concerns have not carried over to the administration of President Donald Trump, who recently referred to climate change as a "con" and has sought to purge the federal government of any acknowledgement of the scientific consensus that it is being caused by human fossil fuel usage, which he has moved to aggressively expand.
In a joint release Thursday, the agencies said they "do not believe principles for managing climate-related financial risk are necessary because the agencies' existing safety and soundness standards require all supervised institutions to have effective risk management commensurate with their size, complexity, and activities," adding that "all supervised institutions are expected to consider and appropriately address all material financial risks and should be resilient to a range of risks, including emerging risks."
Elyse Schupak, policy advocate with Public Citizen's climate program, criticized the withdrawal of the guidelines, calling it "an irresponsible and politically motivated move in the wrong direction."
"The increase in the frequency and severity of climate disasters and the rapidly escalating property insurance crisis mean the agencies should be working harder to understand and mitigate climate-related financial risks faced by banks and the financial system—not backtracking," she said. "Effective bank regulation requires looking squarely at all risks to supervised institutions, including climate risks, and addressing them before they have destabilizing effects. This approach, rather than politics, should guide regulator action."
The move comes as the globe is reaching the point of no return for the climate crisis. Global temperatures have already soared to between 1.3°C and 1.4°C above preindustrial levels and are expected to pass the 1.5°C threshold within the next five years, at which point many of the worst effects will become unavoidable. These effects include more frequent heatwaves, sea level increases, more frequent severe storms, and aggressive droughts.
In addition to the human toll, these entail considerable financial damage. In December 2024, the Congressional Budget Office (CBO) estimated that if the Earth continues to warm at current rates, the nation's gross domestic product (GDP) will be 4% lower than if temperatures had remained stable.
It predicted that sea level rise—projected 1 to 4 feet by the turn of the century—would cause anywhere from $250 billion to $930 billion worth of losses to property owners, mortgage lenders, insurance companies, and the federal government. Other untold costs, it said, would be borne as a result of heightened mortality from heat, declines in available food and water, increased rates of illness, and forced migration due to unlivable conditions.
Testifying before Congress earlier this year, Powell noted that banks and insurance companies have been pulling out of coastal areas at risk of flooding and places prone to wildfires due to the financial risk.
State Farm had recently canceled thousands of policies in the Pacific Palisades neighborhood of Los Angeles shortly before it was hit with massive wildfires in January. He warned that as climate change worsens, financial institutions will deem it too risky to serve large portions of the country.
"If you fast forward 10 or 15 years," Powell said, "there will be regions of the country where you can't get a mortgage, there won't be ATMs, banks won't have branches, and things like that."
Schupak said: "For the Federal Reserve, capitulation to the politics of climate denial championed by the Trump administration is a threat to both its legitimacy and efficacy, which will be hard to repair."
"Powell has admitted that the Federal Reserve has done the 'bare minimum' on climate," she continued. "Now it will do even less, putting the banks it supervises and the broader financial system at risk."
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Challenging First Republic Bank Sale, Warren Says JPMorgan Chase Is Big Enough
"The single biggest threat to the U.S. banking system is more concentration," said the Massachusetts Democrat. "A bank as big as JPMorgan shouldn't be allowed to get even bigger."
May 18, 2023
U.S. Sen. Elizabeth Warren raised alarm about the recent sale of First Republic Bank to JPMorgan Chase—which followed a government takeover of the former—in a letter to financial regulators and a series of questions during a Thursday hearing.
"The failure of First Republic Bank shows how deregulation has made the too-big-to-fail problem even worse," the Massachusetts Democrat said after the controversial sale earlier this month. "Congress needs to make major reforms to fix a broken banking system."
Ahead of the Senate Committee on Banking, Housing, and Urban Affairs hearing, Warren wrote to two officials who appeared before the panel Thursday morning: Martin Gruenberg, chair of the Federal Deposit Insurance Corporation (FDIC), and Michael Hsu, acting head of the Office of the Comptroller of the Currency (OCC).
"The executives at First Republic—who took excessive risks and did not appropriately manage them as interest rates increased throughout 2022 and 2023—bear primary responsibility for this failure," Warren wrote in the letter, dated Wednesday. "I am continuing to seek answers from the bank's executives, and attempting to pass bipartisan legislation that would claw back their excessive compensation."
"But the outcome of this seizure and sale were deeply troubling: It resulted in a $13 billion cost to the Federal Deposit Insurance Fund—which will ultimately be passed on to ordinary bank consumers across the country—and made JPMorgan, the nation's biggest bank, even bigger," she added. "JPMorgan will also record a $2.6 billion gain from the deal."
Warren asked Gruenberg and Hsu to prepare to address the topic at the committee's hearing and also requested written responses to a series of questions by the end of the month.
"One set of questions involves the $13 billion loss to the Federal Deposit Insurance Fund, and why the fund was allowed to take this loss while the FDIC deal made nearly $50 billion worth of uninsured deposits at First Republic—including $30 billion in uninsured deposits from big banks—whole," she noted. "My second set of concerns involves the decision to choose JPMorgan—which was already the nation's largest bank—to acquire First Republic and become even bigger."
During the hearing, Warren explained that "when the FDIC sells a failed bank, the law requires that you choose the highest bidder that will result in the lowest cost to the Deposit Insurance Fund—but the law also requires signoff from the OCC, and the OCC's job, by law, is to consider whether the merger would pose 'risk to the stability of the United States banking or financial system.'"
The senator questioned Hsu about the decision to sell to JPMorgan versus PNC or Citizens Bank, given that selling to either of the latter would have posed less of a risk, based on one metric used by financial regulators that is notably influenced by bank size.
"Comptroller Hsu, your job, by law, is to determine risk to the system from making big banks even bigger, and you have a clear metric for doing that," Warren said. "So how do you explain approving a sale to a banking giant that increases the risk to the banking system by somewhere between nearly 800% and 1,400% more than selling to other bidders? Did you just ignore the fact that a failure at JPMorgan would blow a hole in our banking system... and let them grow by $200 billion?"
After insisting that "for every merger application we follow the law, we follow our guidelines, we follow our policies and procedures," Hsu said focusing only on the metric Warren cited would not have been "wise," and if that approach had been taken, "I fear that there would have been greater financial instability that weekend."
As her time expired, Warren—who was visibly frustrated by Hsu's lack of a broader explanation for choosing JPMorgan Chase—declared that "the single biggest threat to the U.S. banking system is concentration."
"We're all pushing harder for merger guidelines so that we don't get more concentration in the banking system," she told Hsu. "You are the one person who was supposed to use judgment on the question... 'Between multiple sales, which one was the right one to go with, and which one presented more risk to the banking system?'"
"According to your own metric, you chose the one that gives us more concentration in the system," the senator stressed. "I am very troubled by that decision."
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'The Billionaire Bailout': FDIC Chair Says the Biggest Deposit Accounts at SVB Held $13 Billion
"The bailout really did protect billionaires from taking a modest haircut," one observer wrote in response to the FDIC chief.
Mar 28, 2023
In prepared testimony for a Senate Banking Committee hearing slated for Tuesday morning, the chair of the Federal Deposit Insurance Corporation reveals that the 10 largest deposit accounts at Silicon Valley Bank held a combined $13.3 billion, a detail that's likely to intensify criticism of federal regulators' intervention in the firm's recent collapse.
When SVB was spiraling earlier this month, the FDIC, Treasury Department, and Federal Reserve rushed in to backstop the financial system and make all depositors at the California bank whole, including those with accounts over $250,000—the total amount typically covered by FDIC insurance.
"At SVB, the depositors protected by the guarantee of uninsured depositors included not only small and mid-size business customers but also customers with very large account balances," FDIC chief Martin Gruenberg writes in his prepared testimony. "The ten largest deposit accounts at SVB held $13.3 billion, in the aggregate."
Gruenberg goes on to estimate that the FDIC's $125 billion Deposit Insurance Fund (DIF)—which is financed primarily by assessments on insured banks and "backed by the full faith and credit of the United States government"—took a $20 billion hit as a result of the SVB intervention.
According to Gruenberg, nearly 90%—$18 billion—of the DIF loss stemming from SVB is "attributable to the cost of covering uninsured deposits." He added that the DIF absorbed a roughly $1.6 billion cost to cover uninsured deposits at Signature Bank, which failed shortly after SVB.
The FDIC chair's testimony comes as federal regulators continue to face scrutiny for glaring oversight failures in the lead-up to the collapse and backlash over the emergency response, which many have characterized as a bailout for the wealthy and well-connected given SVB's role as a major lender to venture capital and tech startups.
Billionaire Peter Thiel, whose firm was accused of helping spark a bank run by advising clients to pull their money from SVB, told the Financial Times that he had $50 million in a personal account at the bank when it failed earlier this month.
"The bailout really did protect billionaires from taking a modest haircut," Matt Stoller of the American Economic Liberties Project tweeted in response to Gruenberg's testimony.
Writing for The American Prospect on Monday, Revolving Door Project researcher Dylan Gyauch-Lewis called the federal government's swift action in the wake of SVB's failure "a good illustration of the enormous class bias in American policymaking."
"As soon as corporations and the wealthy run into trouble, elites trip over themselves, discarding both law and precedent, to rescue them," Gyauch-Lewis wrote, noting that federal regulators had to classify SVB's collapse as a "systemic risk" to the financial system—a disputed characterization—in order to legally guarantee deposits over $250,000.
For contrast, Gyauch-Lewis added, "consider student loan forgiveness. The legal justification is clear as day, and the authority itself is used regularly. According to the Higher Education Relief Opportunities for Students Act of 2003, the Education Department can forgive student loans as it sees fit in a national emergency."
"At bottom, the core reason SVB's depositors got bailed out had little to do with morals or even financial risk," Gyauch-Lewis argued. "It happened because they had rich and powerful friends with the ear of the president's chief of staff. Broke students don't. The students have to organize and campaign for decades to get something far worse than what they wanted, and for that to hang in the balance at the Supreme Court. The SVB depositors just had to whine on Twitter and make a few calls."
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Reckless Capitalist Banks Rescued by Government Socialism – Again!
The financial system gets another bailout.
Mar 21, 2023
Once again, government socialism—ultimately backed by taxpayers—is saving reckless midsized banks and their depositors. Silicon Valley Bank (S.V.B) and Signature Bank in New York greedily mismanaged their risk levels and had to be closed down. The Federal Deposit Insurance Corporation (FDIC), in return, to avoid a bank panic and a run on other midsized banks went over its $250,000 insurance cap per account and guaranteed all deposits—no matter how large, which are owned by the rich and corporations—in those banks.
Permitting such imprudent risk-taking flows directly from the Trump-GOP Congressional weakening of regulations in 2018, which was supported by dozens of Democrats, led by bank toady Senator Mark Warner (D-Va.). That bipartisan deregulation provided a filibuster-proof passage by the Senate.
The other culprit is the Federal Reserve. Its very fast interest rate hikes reduced the asset value of those two banks’ holdings in long-term Treasury bonds, which reduced their capital reserves. With the "What, me worry?" snooze of the California Department of Financial Protection and Innovation, SVB had little supervision from state regulatory examiners and compliance enforcers.
Actually, big depositors sniffed the shakiness of these two banks and acted ahead of the regulatory cops with mass withdrawals that sealed the fate of SVB. Imagine, SVB was giving out bonuses hours before its collapse. For this cluelessness, the bank's CEO, Gregory Becker, took home about eleven million dollars in pay last year.
All this was predicted by Sen. Elizabeth Warren (D-Mass.) and Rep. Katie Porter (D-Calif.). Warren, in particular, specifically opposed the 2018 Congressional lifting of stronger liquidity and capital requirements along with regular stress tests for banks with assets over $50 billion. Trump's law allowed the absence of these safeguards to cover banks with assets up to $250 billion. Such de-regulation covered SVB and Signature.
Signature Bank had former House Banking Committee Chair Barney Frank on its board of directors. His name is on the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed following the 2008 Wall Street collapse. Even Mr. Frank was clueless about what Signature's CEO Joseph DePaolo was mismanaging. (DePaulo was paid $8.6 million last year.)
Of course, the underfunded FDIC doesn't have enough money to make good all the large depositors in these two banks. So, it is increasing the fees charged to all banks for such government insurance. The banks will find ways to pass these surchargers on to their customers.
Other midsized banks may be shaky as more major depositors pull out and put their money into mega-giant banks like JPMorgan Chase, Bank of America, and Citigroup, which are universally viewed as "too big to fail." The smaller businesses harmed by these closed banks are now on their own. No corporate socialism is as yet saving them.
One of the provisions of the Dodd-Frank law was to require federal agencies to rein in bank executives' pay that incentivizes recklessness and even fraud, as Public Citizen noted. Yet after 13 years, PC declared: "a hodgepodge of federal agencies—the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Federal Reserve, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission—that is supposed to finalize the rule has so far failed to do so."
Defying mandates of Congress, often riddled with waivers from Capitol Hill, is routine for federal agencies. They know that when it comes to law and order for profiteering corporations, Congress is spineless. Have you heard of any resignations or firings from these sleepy regulatory agencies? Of course not. They continue to raise the ante for corporate socialist rescue even beyond their legal authority. For example, where does the FDIC get the authority to guarantee all the deposits in the failed banks when the Congressional limit is strictly $250,000 per account?
Some people will remember Secretary of the Treasury Henry Paulson telling the Washington Post that there were "no authorities" for massive bank bailouts—think Citigroup in 2008 during a private weekend meeting in Washington, DC— but, he said, "someone had to do it."
Meanwhile, the American people remain fearful but silent over the safety of their bank deposits. They heard Treasury Secretary Janet Yellen tell Congress that the banking system "remains sound." Some remember that's what her predecessor said in the spring of 2008 about Fannie Mae and Freddie Mac—the safest investments after Treasury bonds. By the fall, both of these giants had collapsed taking millions of trusting shareholders down with them.
Finally, all those brilliant economists at the Federal Reserve surely must know that when midsize banks lose almost 20% on the value of their 10-year Treasuries, due to the very fast interest rate hikes by Jerome Powell's Fed, trouble is on the horizon. Why didn't they anticipate this outcome and do some foreseeing and forestalling? Nah, why worry, didn't you know that the Fed prints money?
Or maybe the Federal Reserve (its budget comes from bank fees, not the Congress), couldn't see beyond fighting inflation, something it did not take seriously in time over a year and a half ago. More than a few outside economists repeatedly gave the Fed fair warning. But then the Fed, hardly ever criticized by the mainstream press, was listening to its brilliant economists.
Stay tuned. This rollercoaster ride is not over yet.
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Biden Says Top Executives of Failed Banks Should Face Harsher Penalties
The president is "rightfully fighting to hold bank executives accountable for their failures," said Sen. Elizabeth Warren.
Mar 17, 2023
Days after U.S. Sen. Elizabeth Warren expressed outrage over the bonuses that Silicon Valley Bank executives were handing out hours before the bank failed, President Joe Biden on Friday called on Congress to strengthen regulatory powers to hold officials at failed banks accountable.
The president said in a statement that the White House's authority to hold SVB executives directly responsible for the failure is limited, but said Congress can and should pass legislation granting the Federal Deposit Insurance Corporation (FDIC) broader powers to take action against former SVB CEO Greg Becker and other executives.
He called on lawmakers to allow the FDIC to claw back compensation from executives, impose civil penalties, and bar executives from working in the financial services industry if their banks failed "due to mismanagement and excessive risk taking."
"I'm firmly committed to accountability for those responsible for this mess," said Biden. "No one is above the law—and strengthening accountability is an important deterrent to prevent mismanagement in the future. Congress must act to impose tougher penalties for senior bank executives whose mismanagement contributed to their institutions failing."
SVB and Becker himself raked in significant profits by largely serving wealthy tech companies, and took a risk by holding an "abnormally large ratio of uninsured deposits," as Warren said earlier this week. They also invested a large share of the funds into long-term Treasury bonds whose value plummeted as interest rates rose, causing the bank's clients to withdraw their money only to find SVB did not have sufficient funds on hand.
In addition to giving out bonuses hours before SVB collapsed, Becker sold roughly $3 million worth of shares of the bank in the weeks before the failure.
Currently the FDIC can claw back compensation of executives of the nation's largest banks if they fail and can only impose other penalties if executives act with "recklessness" or "willful or continuing disregard."
Biden called for Congress to allow the regulatory agency to penalize executives for "negligent" conduct as well.
Warren applauded Biden's call, saying the president is "rightfully fighting to hold bank executives accountable for their failures."
"We need to claw back every penny of their unjust pay and bonuses, impose real penalties, and ensure these executives never work in the banking industry again," said the Massachusetts Democrat. "Congress must step up."
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Silicon Valley Bank Collapses in Largest Failure Since 2008 Crisis
The bank's financial woes rattled Wall Street and left depositors scrambling to withdraw their money.
Mar 10, 2023
Santa Clara-based Silicon Valley Bank, a major lender to technology startups, collapsed on Friday after its emergency attempts to raise money and find a potential buyer failed, forcing regulators to step in and take over the institution.
The speed of SVB's collapse, the largest since the fall of Washington Mutual in 2008, stunned observers and rattled Wall Street, with bank stocks selling off heavily since news broke Wednesday that the California bank was in serious financial trouble.
Earlier this week, the SVB announced that it sold $21 billion worth of investments and moved to sell its stock in a last-ditch effort to raise funds. Those financial maneuvers sparked a bank run as panicked depositors rushed to pull their money, compounding the firm's crisis.
As late as Thursday afternoon, SVB Financial Group CEO Greg Becker was telling clients to "stay calm" and continue to support the bank, which was the 16th largest in the U.S. at the end of last year and had branches in California and Massachusetts.
"Banks fail, that's an intrinsic part of capitalism. But when large banks collapse, we must learn from them or we risk a systemically unstable financial system."
The Financial Times reported Friday that SVB's failure stemmed from "a decision made at the peak of the tech boom to park $91 billion of its deposits in long-dated securities such as mortgage bonds and U.S. Treasuries, which were deemed safe but are now worth $15 billion less than when SVB purchased them after the Federal Reserve aggressively raised interest rates."
The Federal Deposit Insurance Corporation (FDIC) seized SVB's assets on Friday after the company's emergency money-raising efforts fell flat.
In a statement, the FDIC said that it has established a new bank—the Deposit Insurance National Bank of Santa Clara—in order to "protect insured depositors."
"At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank," the agency said. "All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors."
A recent regulatory filing indicates that 93% of SVB's deposits are uninsured. The Wall Street Journal reported that "as of the end of last year, Silicon Valley Bank estimated that uninsured deposits exceeded those insured by FDIC by around $151 billion."
Business accounts are typically only FDIC-insured up to $250,000.
In response to Friday's developments, Bartlett Naylor, financial policy advocate at Public Citizen, said it's imperative that lawmakers get to the bottom of what happened at SBV.
"Congress must hold public hearings to investigate the causes and implications," said Naylor. "Among the issues to explore: How did the Dodd-Frank Wall Street Reform Act mitigate any systemic repercussions? Did the special nature of the bank's operations, including funding venture capital, play a role? Did specific accounting rules about realizing losses play a role? Should any rules that were eliminated or weakened under Trump's administration be reinstated or strengthened? Should banks have more capital and fewer bonds?"
"Banks fail, that's an intrinsic part of capitalism," Naylor added. "But when large banks collapse, we must learn from them or we risk a systemically unstable financial system."
The systemic impacts of SVB's collapse remain unclear.
Treasury Secretary Janet Yellen told lawmakers on Friday that she is "very carefully" monitoring a few banks amid the turmoil surrounding SVB.
This article has been updated to include comment from Public Citizen.
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