The two Democratic senators have made a last-minute attempt to suppress a possible re-nomination of Federal Reserve Chairman Jerome Powell for another term due to the reluctance of a Trump-appointed politician to use central bank tools to combat climate change.
Senator Sheldon Whitehouse (M.D.) and Jeff Merkley (Oregon Democrat) called on President Joe Biden not to reappoint Powell, stating in a November 19 joint statement that the Fed chief “refuses to recognize climate change as a pressing and urgent issue. a systemic economic threat, “while criticizing his past statements that central bank officials are reluctant to act as” climate policy makers. “
“During his tenure, Chairman Powell initially ignored climate change and then resisted the Fed’s calls to use its tools to combat it, arguing that climate change“ is actually a problem that has been entrusted to many other government agencies, not at the Fed “. … “At a hearing earlier this year, he said,” We are not and do not seek to be climate policymakers, “two senators wrote.
On Twitter, Merkley added“We need a Fed chairman who understands the urgent need for bold action to tackle climate change. This man is not Jerome Powell. “
That came when President Joe Biden last week met with two leading candidates, Powell and Lael Brainard, the only Democrat on the Fed’s seven-member council, ahead of his decision to appoint one of them to a four-year term as head of the central bank starting in February. next year.
Brainard, Ph.D., educated at Harvard. economist, widely seen as more peaceful with regard to monetary policy and stronger control over banking regulation. She also proposed a more proactive role for the Fed on climate change, announcing at a research conference in October that the Fed is developing climate scenarios for use in bank stress tests, and endorsed the use of Fed supervisory guidance for financial institutions. to help them reduce climate risks.
Powell, nominated by then President Donald Trump as Fed Chairman, said in June that climate change is indeed creating “serious problems for the global economy and, of course, the financial system,” but dismissed the idea that the Fed should play a prominent role in the fight against the problem goes beyond assessing its potential impacts and associated risks.
“Climate change is not something that we directly consider when setting monetary policy,” Powell said in a June panel discussion on how the financial sector can tackle climate risks.
“Central banks can play an important role in constructing analysis… to quantify risks. … But we are not and do not seek to be climate policymakers per se, ”a role that should be left to elected officials, Powell said at the time.
Climate policy “is not a matter for the Federal Reserve,” Powell added.
But Merkley and Whitehouse disagree, arguing that the climate “requires immediate action” and that institutions that are unprepared for the effects of climate change “could lose billions by threatening their balance sheets and the stability of our financial system.”
“Price stability, the security and resilience of our financial system, and millions of jobs and businesses are at stake — all of which are directly within the purview of the Fed,” the duo wrote.
Nonetheless, under Powell’s leadership, the Fed has joined the Greening the Financial System Network, an international group exploring ways to integrate climate risk into the governance, supervision and regulation of banks. It has also begun to conduct additional research on the economic implications of climate change and, to that end, established two internal bodies, the Climate Oversight Committee and the Financial Stability Climate Committee, to better understand and address climate-related risks to financial institutions and the financial system as a whole.
Biden is expected to announce his decision on the next Fed chairman before Thanksgiving.
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Tom Ozimek has extensive experience in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he has ever heard is from Roy Peter Clarke: “Hit your target” and “leave the best for last.”
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