Fed Tells 6 U.S. Banks To Join Program On Climate Change Next Year

The Federal Reserve announced last week that six of the largest US banks — Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo — will participate in a pilot program next year that assesses their ability to withstand a number of climate change-related scenarios, Nicole Goodkind wrote for Before the Bell of CNN Business.

Photo Insert: Climate activists said that the project was long overdue and that other central banks are far ahead of the Fed on climate risk assessments.

Climate activists said that the project was long overdue and that other central banks are far ahead of the Fed on climate risk assessments. The Bank of England ran a similar exercise in 2021.

They also said the proposal lacked any real teeth. In its announcement, the Federal Reserve stressed that the exercise "is exploratory in nature and does not have capital consequences." It also said that it would not publish individual banks' results.

San Francisco Federal Reserve President Mary Daly said on Thursday that this was a learning and exploratory exercise for the Federal Reserve. It would be "incredibly premature to jump to the conclusion that any new policies or programs would come out of it," she said.

The other side: Still, critics argued that the Federal Reserve was overstepping its boundaries and that they might soon begin to enforce financial penalties.

"The Fed's new 'pilot' program is the first step toward pressuring banks into limiting loans to and investments in traditional energy companies and other disfavored carbon-emitting sectors," wrote Republican Senator Pat Toomey, ranking member of the Senate Banking Committee.

"The real purpose of this program is to ultimately produce new regulatory requirements."

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