Center for American Progress

The Fed has a clear mandate to mitigate climate risks
In the News

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.

The positions of American Progress, and our policy experts, are independent, and the findings and conclusions presented are those of American Progress alone. A full list of supporters is available here. American Progress would like to acknowledge the many generous supporters who make our work possible.

Author

Todd Phillips

Director, Financial Regulation and Corporate Governance