Interagency climate risk principles for institutions with at least $100 billion in assets illustrate banking regulators’ lost focus on core financial risks, Federal Reserve Governor Michelle Bowman said.
Remarks: Speaking in South Carolina, Bowman said the climate guidance mandates a diversion of limited supervisory resources away from critical, near-term safety and soundness risks. “The evidence suggests that climate change is not currently a prominent financial risk to the banking system,” she said.
ICBA Advocacy: In a national news release after regulators issued the guidance in October, ICBA said it is troubled by the impact these principles may ultimately have on community banks. In previous letters to regulators, ICBA said the principles could ultimately trickle down to affect community banks.
ICBA View: ICBA strongly opposes climate risk regulation of community banks and has separately expressed concerns with Securities and Exchange Commission and New York State Department of Financial Services climate proposals, including in an American Banker op-ed last year. ICBA separately told Congress that climate risk regulation is an emerging threat to the business model of community banks and the customers they serve.