Oklahoma Congressman Frank Lucas had some pointed climate questions during a House Committee hearing featuring Jerome Powell, Chairman of the Board of Governors of the Federal Reserve System.
Powell went before the House Committee on Financial Services to discuss monetary policy and the state of the economy. That’s when Rep. Lucas, the ranking member of the House Committee on Science, Space, and Technology questioned him how the Federal Reserve will approach climate risk assessments.
Lucas believes it is essential that U.S. investment in energy projects is not disincentivized due to capricious Fed-intervention according a press release following the hearing. Congressman Lucas also discussed the effects of the 1918 Spanish Flu epidemic with Chairman Powell and questioned how central banks are responding to the economic impact of the coronavirus.
|Watch Congressman Lucas’ remarks here.
On global climate risk
Lucas: Chairman Powell, during your testimony before the Joint Economic Committee last year, you were asked about what steps the Federal Reserve is taking to assess the impacts of climate change on our financial system. In your testimony, you made the distinction between the purely informative stress test for climate risk that the Bank of England does and what the U.S. stress testing regime under C-CAR does, which is impact and inform capital requirements for capital distributions. My understanding is the Bank of England is conducting research and asking financial institutions to think through their portfolios and how they could be impact, but they are not currently integrating these measures into capital requirements. Would you outline some of what the Fed is doing in terms of research and engagement on global climate risk?
Chairman Powell: I should begin by saying that climate change is a very important issue that Congress has largely assigned to other agencies. It does play into our work however, as it relates to the public’s very reasonable expectation that we would make sure the financial sector of the banks, the utilities that we supervise are resilient to the longer term risks of climate change.
Lucas: Are you planning on joining the Network for Greening the Financial System?
Chairman Powell: We haven’t made a decision about that.
Source: Lucas press release