U.S. Fed should require banks to hold more cash for climate risks -think tank
12 May 2021 | Economic News
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U.S. Fed should require banks to hold more cash for climate risks -think tank
The U.S. Federal Reserve should force banks to hold more cash to guard against potential losses due to climate change and possible steps to fight it, one of Washington’s top liberal think tanks said on Tuesday.
The plan here, published by the Center for American Progress and seen first by Reuters, is likely to inform a looming debate about exactly how far bank regulators should go in policing climate change as the Biden administration looks to tackle the issue on all fronts.
The paper argues that the Fed could move quickly to bolster banks’ capital cushions by establishing several new safeguards, including a new capital surcharge directly tied to how much pollution banks directly finance and heightened stress tests of big banks that incorporate climate risks.
Several of the changes are likely to be strongly opposed by Wall Street, and the Fed itself has taken a much more deliberate approach to climate than sought by progressive Democrats.
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