A top economic adviser to President Joe Biden says climate-related policies are a top priority as the White House considers who it would like to serve in the top job in the Federal Reserve.
Heather Boushey, a member of the White House’s Council of Economic Advisers, said the Biden administration generally sees a link between economic policies and risks arising from climate change.
“When we think about managing the economy while thinking about the financial system, and really making sure that we take into account these physical costs and transition costs of climate change, it’s an urgent and first priority,” Boushey told Yahoo Finance in an interview. Thursday.
Boushey did not say whether she supports current Fed Governor Lael Brainard or incumbent Fed Chairman Jerome Powell for the job, the last two candidates said. But Brainard has been the one inside the central bank, which is leading the efforts to strengthen the monitoring of climate-related financial risks;.
Powell has supported these measures, but has also made reservations about the Fed’s work on climate risk.
“We are not, and we are not looking to be, climate politicians,” Powell said of one climate conference in June. He later added that “[the Fed] should avoid trying to fill public policy where governments have not yet done so. “
Friday morning, Sens said. Sheldon Whitehouse of Rhode Island and Jeff Merkley of Oregon said they would not support a Powell nomination, arguing that he has not been aggressive enough on climate issues.
“President Biden must appoint a Fed chairman who will ensure that the Fed fulfills its mandate to protect our financial system and shares the administration’s view that combating climate change is the responsibility of every policy maker. That person is not Jerome Powell,” he said. the two Democrats in a statement.
Other Democrats have also expressed opposition to Powell’s nomination, and may have tipped the scales in favor of a Brainard nomination. Last month, Massachusetts Senator Elizabeth Warren said she would not support Powell because of his record of bank regulation, arguing that regulatory backlash to the law after the financial crisis known as Dodd-Frank makes Powell a “dangerous man.”
Late. Tina Smith (D-Minn.) Told Yahoo Finance that she has been meeting with both Powell and Brainard for the past few months and said her focus is also on climate.
“I am interested in a President of the Federal Reserve who will also look at what we need to do to minimize some of the systemic risks in our economy. For me, one of the biggest challenges we have is the risk of climate change. , Smith told Yahoo Finance on Thursday.
The spotlight on the climate policy of the Federal Reserve raises questions about how the central bank should assess risk within the framework of its congressional mandates.
The Federal Reserve Act requires the central bank to perform following objectives: maximum employment, stable prices and moderate long-term interest rates.
The Fed’s most well-known tool used to achieve these goals is its monetary policy (i.e., raising short-term interest rates). But another tool: monitoring financial stability risks, which work with the Fed’s power to regulate and supervise banks.
Both Brainard and Powell recognize that extreme weather can cause sudden and huge losses for the banking sector. Another risk relates to the transition to greener energy sources, which could disrupt existing fossil fuel industries and create economic volatility.
Republicans like Senator Pat Toomey of Pennsylvania have argued that one is mindful of the climate marks a “sudden deviation” from the Fed’s mandate.
But Brainard has said that regulators “have a responsibility to ensure that financial institutions are resilient to all significant risks – including those related to climate change – both now and in the future.”
Another top White House adviser, Bharat Ramamurti, told Yahoo Finance that he agrees that the climate is well within the Fed’s mandate.
“It simply came to our notice then [regulators’] normal, standard statutory mission to examine and protect the security and soundness of the financial system. It’s just that climate change has emerged as a threat to potential safety and health, and regulators should, in our view, take that into account, ”said Ramamurti, deputy director of the National Economic Council.
Brian Cheung is a reporter covering the Fed, finance and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.
Disclaimers for mcutimes.com
All the information on this website - https://mcutimes.com - is published in good faith and for general information purpose only. mcutimes.com does not make any warranties about the completeness, reliability, and accuracy of this information. Any action you take upon the information you find on this website (mcutimes.com), is strictly at your own risk. mcutimes.com will not be liable for any losses and/or damages in connection with the use of our website.