WASHINGTON, D.C.—Phillip Basil, Director of Banking Policy at Better Markets, issued this statement upon the release of the Federal Reserve’s draft principles for climate-related financial risk management for large banks:
“Better Markets applauds the Federal Reserve’s move to join both the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation in proposing draft principles for the management of climate-related financial risks for our largest banks. Because the Fed has authority over the holding companies of our country’s largest and most complex banks, this is a very important step in ensuring our banks are appropriately managing their climate-related risks.
“As the Fed noted in their announcement, their principles are ‘substantially similar’ to those proposed by the OCC and FDIC earlier this year. The effects of climate change present serious and complicated risks to our banking system, and this type of coordination between the banking agencies is critical to addressing those risks. We look forward to such coordination continuing as the principles are finalized and within the supervisory examination process.
“Importantly, however, the banking agencies must also publicly and formally incorporate climate related risks into the supervisory assessment and ratings process. Doing so would greatly incentivize banks to prioritize the management of these risks and ensure they are appropriately protecting our financial system and economy from a catastrophic buildup of unaddressed climate-related risks.”
Better Markets is a non-profit, non-partisan, and independent organization founded to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.