Financial Regulators Too Focused on ‘Climate Risks’ While Ignoring Silicon Valley Bank, Lawmakers Say
Financial regulators came under scrutiny over what congressional members see as misplaced priorities ahead of the collapse of Silicon Valley Bank (SVB). In a hearing on Wednesday, House Financial Services Committee chair Patrick McHenry (R-N.C.) chastised Federal Reserve vice chair for supervision Michael Barr for making time “to start a review of climate risks in banking” while ignoring red flags at SVB.
In mid-January, the Fed commissioned large banks to conduct reports on the impacts of hypothetical climate emergency scenarios—such as hurricanes, wildfires, and sea-level rise—on the banks’ business models, including how these events would affect real estate portfolios, the frequency of loan defaults, and changes in investment-grade ratings. The banks were also asked to run similar scenarios on the financial impact of the green “transition,” the Fed demanding the reports by July of this year….