Warren Grills Banks on Climate Risk

Sen. Elizabeth Warren (D-MA) has queried the nation’s leading banks to detail their preparations for handling risks that could be associated with climate change.

 

Reuters reported the senator, who is seeking the Democratic Party’s presidential nomination, reached out via letters to the leaders of Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley, State Street and Wells Fargo. In her letter, she detailed recent natural disasters that she said were exacerbated by climate change and queried how the banks were weighing risks created by this situation, particularly in regard home values.

 

“I write to ask for more information about the risks caused by the climate crisis on the financial industry and your institution’s practices, including what steps, if any, your institution is taking to adapt to mitigate these risks,” she said in the letters, adding that she wanted the bank chiefs to respond by Feb. 7.

 

The connection between climate change and the financial services industry is gaining more attention. In November, the Federal Reserve signaled the possibility that climate change risk might be integrated into determining the state of financial stability and future monetary policy decisions. Also in November, Sen. Brian Schatz (D-HI), a member of the Senate Banking Committee and chairman of the Senate Democrats’ Special Committee on the Climate Crisis, 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.

 

And last summer, a study from Zillow and Climate Control warned that 20,000 homes built over the past decade are in coastal areas that are at risk for chronic flooding by 2050. The study also warned that more than 800,000 homes worth a total of $451 billion could be at a risk by 2050 if rising sea levels continue as a result of unchecked greenhouse gas emissions.  

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