Skip to main content

Senate Bill Seeks Stress Tests for Climate-Related Financial Risks

Phil Hall
Nov 21, 2019
Photo credit: Getty Images/Boonyachoat

Sen. Brian Schatz (D-HI), a member of the Senate Banking Committee and chairman of the Senate Democrats’ Special Committee on the Climate Crisis, has introduced the Climate Change Financial Risk Act of 2019, which will require the Federal Reserve to conduct biennial stress tests on large financial institutions to determine if they can withstand climate-related financial risks.
 
The Climate Change Financial Risk Act would require the central bank to establish an advisory group of climate scientists and climate economists to develop the test scenarios, which would be divided into three categories: A 1.5 degree Celsius warming scenario a 2 degree scenario and a “business as usual” scenario that assumes a higher level of warming based on current climate policies. Financial institutions with more than $250 billion in total consolidated assets and are subject to Comprehensive Capital Analysis and Review (CCAR) stress tests would be required to submit to these tests.
 
“While our federal regulators are legally obligated to manage and reduce risks in the financial system, they have been ignoring the growing financial risks of climate change,” said Schatz. “We should not be treating some risks different from others: risks are risks. This bill will push the Fed to do their job and start taking climate risk seriously.”
 
In the Senate, the legislation’s co-sponsors include five candidates for the 2020 Democratic presidential nomination: Elizabeth Warren (D-MA), Michael Bennet (D-CO), Cory Booker (D-NJ), Amy Klobuchar (D-MN) and Kamala Harris (D-CA). A companion legislation has been introduced in the House of Representatives by U.S. Representative Sean Casten (D-IL).
 
Earlier in the month, the Federal Reserve indicated the possibility that climate change risk might be integrated into determining the state of financial stability and future monetary policy decisions.

 
Published
Nov 21, 2019
R.I. Mortgage Broker Pleads Guilty To $6M Ponzi Scheme

Decade-long scheme was used to finance a lavish lifestyle.

Regulation and Compliance
Sep 30, 2022
Fannie Mae Names Almodovar Its New CEO

Financial services veteran brings more than 30 years experience and a strong commitment to affordable housing.

Regulation and Compliance
Sep 29, 2022
OCC Fines Sterling Bank & Trust $6M Over Mortgage Fraud

Bank, parent company remain under criminal investigation by Justice Department and SEC.

Regulation and Compliance
Sep 27, 2022
Federal Court Shutters Sham Mortgage Relief Operation

FTC, California agency accuse 2 business owners of scam that cost consumers millions of dollars.

Regulation and Compliance
Sep 22, 2022
CFPB Seeks Input On Creating New Mortgage Products

Agency seeks information on refinances, mortgage products to promote competition and support household financial stability.

Regulation and Compliance
Sep 22, 2022
The Fed Raises Interest Rate 0.75% For The 3rd Time

Chairman said housing market may have to go through "a correction" to return to balance.

Regulation and Compliance
Sep 21, 2022