Fed Gets GOP Rebuke On Climate; FOMC Meets Next Week

It was a relatively quiet week for the Federal Reserve. Members of the House GOP sent a letter that was considered “a shot over the bow” to the Fed for its recent inclusion of climate change in the Financial Stability Report. The Fed has also requested admission into a group of international central banks and regulators called the Network for Greening The Financial System (NGFS).

Since the Financial Stability Report is directly connected to the annual Supervisory Stress Test scenarios, the letter's thrust was urging the Fed to use extreme caution and assess the potential impact of stress testing banks for their exposure to climate change. The concern articulated in the letter is that it could lead banks to unilaterally cut their exposure to the oil and gas industry and cite supervisory concerns as their justification. The letter, which enjoyed pretty diverse support from Republicans in the House, urged the Fed to engage with the NGFS sparingly. This is likely just the first iteration of many partisan skirmishes on this issue.

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