Fed Nominee Stalled Over Climate Leadership
Sarah Bloom Raskin is President Biden's nomination for vice chair for supervision of the Federal Reserve. But her nomination, along with the four other high-level positions at the Fed, hasn't moved forward. All 12 Republican members of the Senate Banking Committee skipped a vote last month that would have advanced the process to a full Senate vote, leaving nominees in limbo. The boycott was specifically to block Bloom Raskin, who has called fossil fuels "a terrible investment." Meanwhile, the fossil fuel industry has donated to the campaigns of all Republican committee members.
"The Republicans are always at the beck and call of their fossil-fuel contributors," said Senator Sherrod Brown, the Banking Committee's chairman, to the New Yorker. They're on lifetime lease to the fossil fuel industry."
Bloomberg: Senate GOP to Stall Vote on Raskin Fed Nomination, Feburary 15, 2022.
Why This Matters
One of the Fed's responsibilities is to define economic risks at the national level. If Bloom Raskin's appointment goes through, she would be in charge of long-term risk assessment. And if the Fed identifies climate change as the systemic risks it poses, financial institutions would have to respond accordingly when considering loans for fossil fuel companies. Given the latest UN climate report and climate-charged weather disasters we've already seen, the cost of business as usual is the riskier option.
CNBC: Why climate change could lead to a financial crisis (and what we can do about it), May 6, 2021.
The Berkeley Forum: Sarah Bloom Raskin, April 5, 2021.
The "Outlier" On Climate Risk In Banking
The protection of the status quo by Senate Republicans puts the US at odds with other central banks and financial institutions, and the private sector. Many of the largest US banks are forming a consortium specifically about climate risks. The private equity firm Blackstone is stopping investment in oil and gas production. "Over the last several years, we have found that the risk and return characteristics on our energy transition investments are more attractive than in the upstream sector," said David Foley, who leads the company's energy business.
Last summer, the European Central Bank announced it would consider climate change in its monetary policy strategy.
"It's the United States that’s an outlier in this discussion. The central banks and economists all over the world realize there’s a climate risk," said Joseph Stiglitz to the New Yorker. He is a Nobel Prize-winning economist and professor at Columbia University.
But there could be changes coming, and not just from the Fed. Acting Chairman of the FDIC Board of Directors, Martin J. Gruenberg, has called out the US for being "behind the curve" with "a lot of ground to make up" on global climate issues, including financial impacts.
The Climate Pod: How Fossil Fuel Interests Weaponized Economists (With Ben Franta), September 15, 2021.
Duke University School of Law: Rostin Behnam & Sarah Bloom Raskin | The Impact of Climate Change on Financial Stability, October 29, 2019.