Biden’s latest Fed pick signals brewing climate battles

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President Biden’s plan to tap Sarah Bloom Ruskin as the top banking regulator at the Federal Reserve could accelerate the central bank’s already growing focus on climate change.

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Catch up fast: News broke Thursday night that Biden would nominate Duke University law professor Ruskin to the powerful role of vice president overseeing.

She was Fed governor from 2010 to 2014 before joining the Treasury Department during the Obama administration.

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Why this matters: Ruskin has been vocal on the need for financial regulators to prevent climate change from becoming a systemic risk to the banking system.

And it has also supported a climate role for financial regulators that goes beyond analysis and planning efforts.

  • in september he wrote an op-ed It said financial regulatory agencies should help firms anticipate and address climate risks, but also play an active role in cutting emissions.
  • ,[Regulators] need to ask ourselves how their existing tools can be used to encourage a rapid, orderly and appropriate transition from high-emissions and biodiversity-destroying investments,” she wrote for Project Syndicate. .
  • Ruskin participates in “regenerative crisis committee, “a panel of financial and legal experts whose purpose is to identify “financial, monetary, and financial regulatory policies that will enable the United States to achieve net carbon neutrality before 2050.”
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Intrigue: It’s too soon to know what specific policies Ruskin might seek out if she moves from the private sector to become the Fed’s top Wall Street cop and whether she can win support for them on a consensus-based Fed board. Is.

  • Some environmental groups have proposed ideas such as “portfolio limits” on the level of polluting assets, such as oil and gas companies, that banks can invest in. He also says the Fed should increase the capital banks should keep for their fossil portfolios.

What are we watching: Capitol Hill. Pat Tommy, the top Republican on the Senate Banking Committee, has “serious concerns” about Ruskin, arguing that he has taken stances that could undermine economic growth, Bloomberg told,

If all Republicans oppose him, he would need the votes of every Democrat, including Joe Manchin (DW.Va.), whose state is a major coal and gas producer. His spokesperson did not provide any comment.

Senate attendance this week Nominees for top Federal Reserve jobs dropped fresh hints on their climate plans and showed the scale of GOP resistance to the Fed’s work on the subject.

  • On Thursday, Vice President-nominee Lyle Brainard appeared before the Senate Banking Committee. Fed Chairman Jerome Powell, who has been tapped by President Biden for a second term, testified on Tuesday.

Powell and Brainard did not indicate support for new fossil loan restrictions, even if they promised in-depth climate analysis.

  • “We won’t tell banks which areas to lend or which areas not to lend, but we want to make sure they’re measuring, monitoring and monitoring their physical risks,” Brainard said. are managing.”
  • Both Powell and Brainard discussed plans to assess the risks to the financial system and conduct a “scenario analysis” of the resilience of large banks.

Second aspect: Many Republicans attacked the Fed’s growing climate efforts, which they consider mission creep.

  • The committee’s ranking member, Tommy, fears that an analysis of banks’ exposure to climate risks is a harbinger of unnecessary new sanctions.
  • “The whole purpose is to test whether banks are prepared to address the perceived risks associated with climate change, and then if the Fed determines they are not up to promulgating new regulatory requirements,” he said yesterday.

Andrew Friedman contributed reporting.

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