Biden wants to turn the Fed into a climate change regulator
Among the many goals of the Biden administration when it came to power was doing something serious about global warming/climate change. Most of those efforts have stumbled in Congress. But some may yet come to pass through a new venue the Federal Reserve.
Biden’s nominee for a Fed vice chairmanship would make the central bank – whose legal mandates are price stability and employment – become an enforcer of climate regulations:
Biden has tapped Sarah Bloom Raskin, a climate warrior who has called fossil fuels “a terrible investment,” for the Federal Reserve’s top regulatory job. Martin Gruenberg will take over the FDIC after Democrats on the panel rebelled against Chairman Jelena McWilliams, a Trump appointee, prompting her to resign. And the Office of the Comptroller of the Currency, a lesser-known but powerful banking agency, is led on an acting basis by Michael Hsu, who has put climate issues front and center.
The climate posse isn’t limited to these agencies:
In addition, Securities and Exchange Commission Chair Gary Gensler is expected to propose sweeping rules that would require banks and other public companies to disclose their contributions to climate change and environmental risks. That could give investors and regulators more information to judge their exposure.
But not all will be smooth sailing for Biden’s climate warriors:
…Sen. Pat Toomey of Pennsylvania, the top-ranking Republican on the Banking Committee, which will vet [Raskin’s Federal Reserve] nomination.
“Sarah Bloom Raskin has specifically called for the Fed to pressure banks to choke off credit to traditional energy companies and to exclude those employers from any Fed emergency lending facilities,” Toomey said in a statement after Biden announced her nomination… “I have serious concerns that she would abuse the Fed’s narrow statutory mandates on monetary policy and banking supervision to have the central bank actively engaged in capital allocation. Such actions not only threaten both the Fed’s independence and effectiveness, but would also weaken economic growth.”
Converting the Fed into an arm of social policy is dangerous (leading, as it often does, to asset bubbles and misallocation of resources). The Senate would be wise to reject nominees who want the Fed to be something it never has been, nor should be.