Skip to main content

Sign up for our newsletter.

Quality journalism. Progressive values. Direct to your inbox.

Dear Common Dreams Readers:
Corporations and billionaires have their own media. Shouldn't we? When you “follow the money” that funds our independent journalism, it all leads back to this: people like you. Our supporters are what allows us to produce journalism in the public interest that is beholden only to people, our planet, and the common good. Please support our Mid-Year Campaign so that we always have a newsroom for the people that is funded by the people. Thank you for your support. --Jon Queally, managing editor

Join the small group of generous readers who donate, keeping Common Dreams free for millions of people each year. Without your help, we won’t survive.

fed-1

The US Federal Reserve on December 12, 2021 in Washington DC. (Photo: Daniel Slim/AFP via Getty Images)

The Fed Must Act on the Climate Crisis to Protect Our Planet and Economy

It’s time for the Federal Reserve and all financial regulators to step up and treat the climate crisis with the urgency it demands—before it’s too late.

Mondaire JonesEd Markey

 by CNBC

In 2007, our global financial system was pushed to the brink of collapse after financial regulators ignored reckless lending.

In the aftermath of that financial crisis, regulators vowed to prevent a similar crisis in the future.

But now, those same regulators are once again ignoring a devastating risk to our economy, our health, and our safety: the climate crisis.

We must address the role that big banks play in fossil fuel financing and direct regulators to protect consumers from the risks that climate change poses to our economy. 

Last month, President Joe Biden and leaders from more than 190 countries gathered in Glasgow for the 26th Conference of Parties to the United Nations Framework Convention on Climate Change, a summit to strengthen climate action commitments under the Paris climate agreement.

In Glasgow, Biden reiterated the U.S.'s commitment to cut emissions that cause dangerous short-term warming and end new international financing of unabated fossil fuel energy.

Banks controlling $130 trillion in assets pledged to align their investing activities to achieve net-zero emissions by 2050. These commitments move us toward the bold action we need to protect public health and safeguard our future, but pledges and promises only go so far. We need action and accountability.

And we need leadership that will get it done. We were disappointed in the Biden administration's decision to nominate Jerome Powell to continue serving as Chairman of the Federal Reserve – the top financial regulator job in the country. Rather than heed Biden's call for a "whole-of-government" approach to climate change, Powell has said climate change "is really an issue that is assigned to lots of other government agencies, not so much the Fed."

But our banking system, which the Fed oversees, plays a key role in causing the climate crisis, while being uniquely exposed to climate risks. From 2016 to 2020, banks provided $3.8 trillion to the fossil fuel industry, with most of that investment coming from institutions under the Fed's supervision—financing that is used for projects that accelerate the climate crisis and will become worthless assets on banks' ledgers in a clean energy economy.

We must address the role that big banks play in fossil fuel financing and direct regulators to protect consumers from the risks that climate change poses to our economy. 

Our global counterparts are already working to protect their financial systems from investments that are bad for the climate and dangerous for lenders.

The Bank of England conducts climate stress tests to understand the resilience of U.K. financial institutions to climate risks and, starting in 2022, will require banks to hold additional capital to offset these risks.

The European Central Bank (ECB) announced a plan to further incorporate climate considerations into its monetary policy framework, including its own asset purchases. The ECB also has committed to climate stress tests and the inclusion of climate considerations when valuing bank assets used as collateral. 

But to date, the Fed has failed to follow the examples set by its counterparts. This is why we introduced the Fossil Free Finance Act, legislation that would compel the Fed to become part of the all-of-government approach to combat the climate crisis.

Our legislation would require banks and other large financial institutions to wind down their lending to polluting industries, in line with our national climate targets. It also would hold the largest banks accountable to scientifically necessary climate targets, rather than banking on their promises alone. 

As the United States commits to ambitious emissions reduction goals, we must also commit to ending the flow of capital to the industries responsible for these emissions. And that starts with financial regulators.

After the 2008 economic collapse, the Fed vowed to do more to prevent systemic risks to our financial system. But today, regulators are failing to address the biggest risk to our economy and our planet - a risk that, if left unaddressed, will be orders of magnitude worse than anything we saw in the late 2000s.

It's time for the Federal Reserve and all financial regulators to step up and treat the climate crisis with the urgency it demands—before it's too late.  


Mondaire Jones

Mondaire Jones is the Democratic nominee to represent Rockland and parts of Westchester counties in the U.S. House.

Ed Markey

Senator Edward J. Markey is a Democrat representing Massachusetts in the U.S. Senate. Follow him on Twitter: @SenMarkey

Just a few days left in our crucial Mid-Year Campaign and we might not make it without your help.
Who funds our independent journalism? Readers like you who believe in our mission: To inform. To inspire. To ignite change for the common good. No corporate advertisers. No billionaire founder. Our non-partisan, nonprofit media model has only one source of revenue: The people who read and value this work and our mission. That's it.
And the model is simple: If everyone just gives whatever amount they can afford and think is reasonable—$3, $9, $29, or more—we can continue. If not enough do, we go dark.

All the small gifts add up to something otherwise impossible. Please join us today. Donate to Common Dreams. This is crunch time. We need you now.

'Witness Intimidation. Clear as Day': Jan. 6 Panel Teases Evidence of Cover-Up Effort

"Add witness tampering to the laundry list of crimes Trump and his allies must be charged with," said professor Robert Reich.

Jessica Corbett ·


'Bombshell After Bombshell' Dropped as Jan. 6 Testimony Homes In On Trump Guilt

"Hutchinson's testimony of the deeply detailed plans of January 6 and the inaction of those in the White House in response to the violence show just how close we came to a coup," said one pro-democracy organizer.

Brett Wilkins ·


Mark Meadows 'Did Seek That Pardon, Yes Ma'am,' Hutchinson Testifies

The former aide confirmed that attorney Rudy Giuliani also sought a presidential pardon related to the January 6 attack.

Jessica Corbett ·


UN Chief Warns of 'Ocean Emergency' as Leaders Confront Biodiversity Loss, Pollution

"We must turn the tide," said Secretary-General António Guterres. "A healthy and productive ocean is vital to our shared future."

Julia Conley ·


'I Don't F—ing Care That They Have Weapons': Trump Wanted Security to Let Armed Supporters March on Capitol

"They're not here to hurt me," Trump said on the day of the January 6 insurrection, testified a former aide to ex-White House Chief of Staff Mark Meadows.

Jake Johnson ·

Common Dreams Logo