President BidenJoe BidenSouth African Minister of Health Calls Travel Bans Over New COVID Variant Unjustified Biden Attends Tree Lighting Ceremony After Day in Nantucket Senior US Diplomat Visiting Southeast Asia to “reaffirm” the PLUS relationships is under new pressure from climate activists after rejecting their bid to replace Federal Reserve Chairman Jerome Powell.
Biden announced on Monday he would reappoint Powell, a Republican first appointed to the post by the former President TrumpDonald Trump Jan. 6 panel faces double-edged sword with Alex Jones, Roger Stone Trump takes on Woodward, Costa against China Republicans look set to win midterms – unless they fight MORE, to another four-year term at the helm of the Fed’s board despite intense pressure from the left. He also called on Fed Governor Lael Brainard, the only Democrat on the bank’s board, for the post of vice chairman.
Powell is generally aligned with Biden on how best to foster a full recovery from the pandemic-induced recession and has key allies on both sides. But his support for looser financial regulations and his refusal to turn the screw on the fossil fuel industry has prompted many progressive lawmakers and climate groups against his re-appointment.
Shaken by Powell’s reappointment, this broad, progressive coalition is now pushing Biden to appoint a Fed oversight vice president who will tackle the risk climate change poses to the financial sector and steer banks away from financing projects that could make the problem worse.
The role “is extremely important, perhaps even more important than the president” in terms of the types of actions that can help insulate the financial system from the risk of climate and energy change, the group’s Ilmi Granoff said. of ClimateWorks Defense.
This is especially true for someone working under Powell, who has historically “relied on” his vice president for oversight, Granoff said. “You can ask if it should be that way, but if things continue as they always have, I would like Biden’s vice president to be someone who takes oversight of climate-related financial risk seriously. – and who is ready to act. “
The Fed’s vice chairman of oversight is the board’s contact for regulation, banking supervision and financial stability – in charge of everything from ordering stress tests and analyzing scenarios to the definition of bank capital requirements. The post was created by the Dodd-Frank Wall Street reform law of 2010, but remained vacant until Trump appointed Randal Quarles as first vice president of Fed oversight in 2017.
Quarles’ tenure as vice president of oversight ended in October and he is expected to leave the Fed next month, giving Biden another vacancy on the seven-person board of governors. Whoever Biden appoints will likely play a crucial role in driving the Fed’s regulatory agenda, even with Powell in charge.
During Quarles’ tenure, he and Powell presided over a deregulation push. They relaxed and streamlined several Dodd-Frank rules over Brainard’s objections, including reducing capital requirements and postponing stress tests.
“When Vice President Quarles was confirmed in his post, bank lobbyists applauded:“Sen. Sherrod BrownSherrod Campbell Brown Five Senate Democrats Reportedly Opposed Biden’s Bank Candidate Senate Democrats ask Biden to push for COVID-19 vaccine patent waivers at WTO Biden avoids Fed fight, disappointing allies progressives PLUS (D-Ohio) wrote Powell in October.
While Powell may have found it easier to defer to a vice president aligned with his regulatory perspective, he said in September he would let whoever Biden nominate to replace Quarles lead the way.
“It’s a specific authorization,” Powell told reporters at a press conference in September, referring to Dodd-Frank’s creation of the oversight vice-president.
“I respect the fact that this is the person who will set the regulatory agenda in the future, and I would accept that,” Powell continued, adding that it was “entirely appropriate” that a new head of the supervision brings changes.
Important decisions such as the approval of new rules and enforcement actions against the banks must always be approved by a majority on the board of directors of the Fed. But a new, more hawkish supervisory chief could accelerate the Fed’s efforts to assess and limit financial risks to the climate system.
With Powell remaining in the presidency, the Progressives want a vice president for oversight with regulatory background who “is interested in bank concentration and tackling speculation and risky stocks in the financial sector,” said Alex Martin of Americans for Financial Reform – especially those caused by the climate. The recent Financial Stability Oversight Council report, to which the Fed is a signatory, called climate change an “emerging threat to the stability of the US financial system” and urged policymakers to consider regulations that could slow global warming .
One name progressives kept coming back to was Sarah Bloom Raskin, a former board member and Obama’s deputy treasury secretary who spoke openly about the need to prepare the financial system for climate shocks before they do not become overwhelming – a process already well underway in central banks. in Europe and the UK.
Granoff of Climate Works compared the vice president of oversight to the helmsman of a “very big ship,” whose priorities help move the country’s thousands of banks in a cohesive direction.
By calling for climate stress testing and scenario analysis, Granoff added, someone like Raskin can also uncover the types of climate-related financial risks that the Fed and the banks themselves are well prepared to mitigate, but someone has to “establish the monitoring program, to put in place technocratic mechanisms to look at those risks and get the information.” ”
Even so, Biden could face serious challenges securing a true climate hawk through the Senate confirmation process in a chamber equally divided between Democrats and Republicans.
Republican lawmakers have blasted the Fed for its early moves to study climate-related financial risks and fiercely oppose bank stress tests for climate exposure.
Republicans have also warned the Fed against any regulations or efforts that divert funding from the fossil fuel industry to cleaner energy sources – another area that would fall under the oversight chief’s purview – even s ‘they managed to get the Fed to bend the rules. a key pandemic emergency aid bond program to admit oil and gas companies, ending a period of long-term decline for the sector.
The preserved Joe manchinJoe Manchin With extreme gerrymanders locked in, Biden must make preserving democracy a job of one Five Reasons Biden, the GOP to be thankful this season, White House seeks to curb gas prices ahead of season loaded trips PLUS(DW.Va.) opposition to many large-scale climate policies.
An ideologically wide range of Fed officials, including Powell, have also ruled out any action that could be seen as the bank’s picking of winners and losers.
Mary Daly, chairman of the Federal Reserve Bank of San Francisco, said in a virtual interview last month that the central bank cannot afford to risk its independence by being “part of the company’s allocation mechanism.” , or by determining how and on which projects the resources are used.
“If the leaders of Congress decide that the Fed should take on more of these responsibilities, we are all ready to do what we are supposed to do. But taking a step back as someone who has worked for the Fed for a long time, ”she continued,“ I see the real benefits of maintaining an independent central bank and not picking winners and losers in any of the above. discussions emerging in our society. “
But advocates of a more hawkish Fed are pointing fingers at Europe and the UK for a vision of what non-partisan climate finance reform can look like.
“We want the Fed to do what the Europeans are already doing,” said Yevgeny Shrago of consumer group Public Citizen. “Our point is that – as in the housing crisis of 2008 – if the banks finance climate change, it will come and destroy the financial system, so the Fed must encourage the banks to invest in a responsible manner and will not have significant consequences. destruction. “