Federal Reserve Chair Jerome Powell adjusts his tie as he arrives to testify before a Senate Banking, Housing and Urban Affairs Committee hearing.
Biden is set to nominate a new Fed chair.
Re-nominating Jerome Powell would be a mistake.
Powell has downplayed climate change which has a huge effect on our economy.
Yevgeny Shrago is a Policy Counsel in Public Citizen’s Climate Program.
David Arkush is the managing director of Public Citizen’s Climate Program.
This is an opinion column. The thoughts expressed are those of the author.
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The climate crisis is creating risks that banks and regulators like the Federal Reserve are failing to address. Wildfires like the Caldor fire are destroying homes, neighborhoods, and entire towns. Hurricanes like Ida are battering and flooding our coasts. Weekly heat waves are overtaxing electric grids and buckling infrastructure. If we don’t get emissions under control quickly, extreme weather, drought, and migration will soon gut the economies of regions and nations.
A rapid transition to clean energy would create millions of jobs, improve public health, and reduce energy costs. But banks are still making massive investments in oil wells and gas pipelines, even though such investments will become worthless if we are to get emissions under control in time to avert catastrophe. If President Biden doesn’t nominate a Fed Chair and Board who will take an active role, the transition is likely to disrupt employment, retirement savings, and the entire economy.
A new Fed chair for a new mission
The 2008 financial crisis grew out of excessive risk taking by banks, coupled with a hands-off regulatory attitude. When it comes to the risk that climate change poses to the financial system, this is our 2007, when the risks of the subprime mortgage bubble grew into the causes of a financial crisis. Massive threats are on the horizon. Financial regulators need to act, or face a spectacular collapse. As President Biden considers the Fed Chair nomination, with a decision expected as soon as next week, he should account for where the Fed is on guiding the financial system through climate-related challenges.
Last year, the Fed finally joined other central banks in acknowledging that climate change poses a threat to the financial system. Since then, current Chair Jerome Powell has repeated that it’s early days on climate, and that the Fed won’t act before studying the issue more. His speech at the Fed’s annual Jackson Hole symposium, which he used as a de facto pitch for reappointment to a second term, didn’t even mention climate.
This approach invites disaster. To cushion the financial system from climate shocks that will dwarf the 2008 financial crisis, the Fed must act now. With a Chair who appreciates the threat, the regulator has the power to mitigate both the damage climate change does to the financial system, and the damage the financial system is doing to the planet.
The Fed is responsible for making sure the biggest banks don’t precipitate a new financial crisis. That includes JPMorgan …read more
Source:: Business Insider