Fed Considers Adding Climate Change Risks to Monetary Policy

Nov 11, 2019

The Federal Reserve is signaling the possibility that climate change risk might be integrated into determining the state of financial stability and future monetary policy decisions.

According to a Reuters report, the Fed is moving in the opposite direction of the Trump Administration, which announced its decision last week to formally withdraw from the 195-nation Paris Climate Accord. During a San Francisco Fed conference on Friday focusing on climate change and economics, several Fed executives linked environmental and economic concerns into a single focus.

“To fulfill our core responsibilities, it will be important for the Federal Reserve to study the implications of climate change for the economy and the financial system and to adapt our work accordingly,” said Fed Governor Lael Brainard, adding that the Fed will need to consider how to keep banks and the financial system safe from climate-induced risks including extreme weather, higher temperatures and rising sea levels.

“It will be important for the Federal Reserve to take into account the effects of climate change and associated policies in setting monetary policy to achieve our objectives of maximum employment and price stability,” she added. “Climate change is an issue we can’t afford to ignore,” added San Francisco Fed President Mary Daly. “This is not a hypothetical risk of the future. The risks are here, we have to deal with them.”

As climate change impacts the nation, a recent study from Redfin indicates that four California counties could lose roughly $2 trillion in housing value due to the destruction from the ongoing wildfires. According to a study from CoreLogic, 668,000-plus residences with a reconstruction cost value (RCV) of approximately $144.6 billion were at potential risk of storm surge damage from Hurricane Dorian this past September.

About the author

Phil Hall

Link copied

Published

Nov 11, 2019

Industry News

Newfi And Addy AI Announce Partnership

Newfi and Addy AI today announced a collaboration focused on the continued evolution of artificial intelligence in mortgage lending

Newfi and Addy AI today announced a collaboration focused on the continued evolution of artificial intelligence in mortgage lending.Newfi has built innovative lending products and a modern approach to the mortgage market. As the industry evolves, the company continues to exp...

Analysis and Data

Smaller Down Payments Give Buyers More Room, But Rates Limit The Savings

The typical down payment fell 9% from a year ago, while shifting market conditions are giving originators different affordability conversations across the country

Homebuyers are putting less money down than they were a year ago, another sign that increased inventory and greater negotiating room are changing the purchase market.The typical down payment fell to $27,100 in the second quarter of 2026, the lowest second-quarter dollar amou...

Oct

Denver, CO

More from

Industry News

CHLA: More Freddie Mac MBS Buying Could Narrow Mortgage Spreads

Trade group estimates greater Freddie participation could compress spreads another 10 to 12 basis points as Fannie has taken the lead in GSE mortgage-bond buying

Industry News

Sep 23, 2026

Early Loan-Limit Race Splits Into Three Tiers

Lenders are now offering $845,000, $847,440, or $850,000 before FHFA sets the official 2027 limits

Industry News

Sep 23, 2026

Better, Garg Clash Over Claimed 46% Shareholder Support

Better disputes its former CEO’s preliminary consent count as the two sides trade accusations and an Oct. 2 target date approaches

C-Suite Strategies

Sep 23, 2026

Fannie Changes How Rent From A Former Home Counts

Fannie now prohibits leases for departing residences and permits market-analysis tools instead of Form 1007, creating a key documentation difference from Freddie Mac

Regulation and Compliance

Sep 22, 2026

MPF Expands Eligibility For Manufactured And Renovation Loans

The Mortgage Partnership Finance Program has expanded MPF Traditional eligibility for affordable loans, manufactured homes, renovations, and lender-funded assistance

Industry News

Sep 22, 2026