RUMBLING discontent over the US Federal Reserve’s guidance on climate change policies spilled into the open on Thursday, when the central bank became the latest regulatory agency to scrap climate-related guidance.
In a joint statement, the Fed and the Federal Deposit Insurance Corporation (FDIC) said they “do not believe principles for managing climate-related financial risk are necessary.”
This, they added, was because their “existing safety and soundness standards require all supervised institutions to have effective risk management.”
The Office of the Comptroller of the Currency (OCC), which was also listed on the joint statement, withdrew its guidance earlier this year.
Fed governor Christopher Waller used unusually blunt language to voice his approval for the move to scrap guidance for how big banks should manage their climate risks.
“Good riddance,” he wrote in a two-word statement accompanying the Fed’s decision to bin the 2023 guidelines – a marked contrast to the lengthier statements of his colleagues.
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In total, five of the Fed’s seven members voted in favour of repealing the guidance, including Fed chair Jerome Powell, and the bank’s new vice-chair for supervision Michelle Bowman.
“At a time when confidence in public institutions is waning, the Federal Reserve should strive to demonstrate beyond doubt that it executes its duties in an independent manner, focusing on its statutory obligations,” Bowman said in a statement, explaining her decision.
Bowman and Waller were both nominated to the Fed by President Donald Trump during his previous term in office, and are reportedly on Treasury Secretary’s five-person shortlist to run the bank once outgoing chair Jerome Powell steps down next year.
Among the two Fed board members who did not vote in favour, Lisa Cook abstained, while Michael Barr voted against the measure.
“Rescinding the principles is short-sighted and will make the financial system riskier even as climate-related financial risks grow,” Barr said in a statement. AFP
