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The Fed has a clear mandate to mitigate climate risks
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The Fed has a clear mandate to mitigate climate risks

Todd Phillips explains why the Federal Reserve has a clear mandate to help banks mitigate their climate risks.

In a Senate Banking Committee hearing last week, ranking member Sen. Pat Toomey (R-Pa.) warned the Federal Reserve against “stray[ing] from its mandate” by addressing “politically-charged areas like global warming.”

“If this politicization continues unchecked,” the senator threatened, “it will not end well for the Fed.”

These comments are clearly targeted at the likes of Sarah Bloom Raskin, President Biden’s nominee to be the Federal Reserve’s chief bank regulator, who has publicly called for the institution to ensure a smooth transition to a low-carbon economy without disruptions to the financial system.

Toomey is just plain wrong. Addressing banks’ climate risks is core to the Federal Reserve’s legal mandate. In fact, to ignore climate change and the risks it poses would be contrary to their congressionally given mandates. Doing so would not end well for the Fed — or the economy.

The above excerpt was originally published in The Hill. Click here to view the full article.

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Todd Phillips

Former Director, Financial Regulation and Corporate Governance

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