Fed vice chairwoman nominee Brainard grilled by Republicans on climate change

0
11 views


Lael Brainard, President Joe Biden’s pick for vice chairwoman of the Federal Reserve, faced questions from Republicans during a confirmation hearing on Thursday about the Fed’s role relating to climate change.

Brainard, who is well-liked by the Left for her approach to financial regulation, emphasized that while climate change is a broad risk that the Fed reviews, she does not advocate for the Fed trying to influence what sectors banks lend money to.

“We would not tell banks which sectors to lend to or which sectors to not lend to, but we do want to make sure that they are measuring, monitoring, and managing their material risks,” she said.

POWELL PLEDGES TO BRING DOWN INFLATION DURING CONFIRMATION HEARING

Republicans have been keenly interested in the intersection of the Fed and climate change and fear that the central bank could become too politicized if it starts turning its focus to that and other broader societal issues. Sen. Pat Toomey, ranking member of the Banking Committee, has for months been going after regional Fed banks for their research involving hot-button topics such as race, gender, and climate change.

Toomey addressed the physical risks that some surmise climate change could have on financial stability. The Pennsylvania Republican asked Brainard whether she acknowledges that the likelihood of weather events leading to systemic risk during her term as Fed governor is “virtually zero based upon historical data.”

“I wouldn’t have expected us to need to study pandemics five years ago either and yet a lot of our policymaking over the last two years has been really under the cloud of a very complicated set of economic conditions and financial risks associated with a natural event,” Brainard said. “It’s our job just to be very attentive to potential risks to the financial system.”

Brainard said during the hearing that she does not think the Fed should be doing stress tests for climate change.

“Stress tests are very specific, they are related to the capital planning of large financial institutions,” Brainard said. “In terms of supervisory guidance, what we tend to do is ask large institutions in particular, ‘Do you have a good risk management framework for assessing all of your material risks.’”

GOP Sen. Cynthia Lummis of Wyoming pointed out that her state is a major exporter of energy and asked Brainard whether she believes the Fed has the authority to broadly curtail community banks’ investments in coal, oil, or gas exploration. Brainard says she does not believe the central bank has that authority.

“To the extent that supervisory guidance is appropriate, it’s really appropriate for the large banks that have a big imprint — not for small banks, we don’t want to burden community banks in particular,” Brainard told lawmakers.

During the hearing, Brainard was asked by Sen. John Kennedy, a Louisiana Republican, whether federal regulatory authorities should use their power to discourage banks from lending to oil and gas companies or gun manufacturers and dealers.

“That’s not our job. We don’t tell banks which sectors to lend to,” Brainard responded.

Toomey said there are some on the Left and in the Biden administration that want the Fed to become more political in nature. He said he is concerned that the central bank’s involvement in areas such as climate change will undermine its independence and threaten its credibility.

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

Biden recently renominated Fed Chairman Jerome Powell, a Republican, for another term helming the central bank. Some on the Left had hoped that Biden would nominate Brainard for the top role instead of the No. 2 position at the Fed.

Powell also testified before the committee this week where he was questioned about rising inflation and the role the Fed plays in influencing prices.





View original Post

LEAVE A REPLY

Please enter your comment!
Please enter your name here