FOR IMMEDIATE RELEASE
CONTACT: Kenny Stancil, stancil@therevolvingdoorproject.org
Bloomberg reported Wednesday that Jerome Powell’s Federal Reserve has thwarted an international effort to incorporate climate change’s risk to financial stability in global financial rulemaking. Speaking at Stanford’s inaugural Business, Government and Society Forum that same day, Fed chair Powell declared that “we are not, nor do we seek to be, climate policymakers.”
In response, Revolving Door Project Senior Researcher Kenny Stancil said:
“Jerome Powell’s latest claim that acknowledgement of the clear relationship between climate change and financial stability would make the Fed a ‘climate policymaker’ is outrageous. When an ostrich buries its head in the sand, potential predators do not disappear. Likewise, Powell’s ostrich-informed strategy, which waves away obvious climate-related financial risk, is doomed to fail.”
“The Fed’s decision to carry this intransigent posture to the international standard-setting stage is a disgraceful move that threatens a true global regulatory response to the ongoing crisis,” continued Stancil. “The bottom line is that the abdication of responsibility by the Fed would usher the banks right into a crisis that would be disastrous for the US economy. There’s no reason to wait until it’s too late. The time is ripe for the Fed to step up and provide enforceable rules that would protect the public and ensure stability of the US financial system.”
Revolving Door Project Executive Director Jeff Hauser added:
“We told President Biden that Jay Powell was an untrustworthy Republican private equity vulture, and literally everything he has done since Biden announced Powell’s re-appointment has confirmed our view. I wish we had been wrong, but since we were not, we hope that Biden and his team will learn the lesson from this catastrophic mistake if he wins re-election.”
Throughout 2021, the Revolving Door Project urged Biden not to reappoint Trump’s Fed chair. We argued that Powell, a Republican well-versed in Wall Street predation, was ethically unfit and far too weak on financial regulation. Powell’s supporters countered that the private equity veteran would defer to the Fed’s vice chair for supervision (VCS) on regulatory issues. RDP never accepted this argument, and Powell’s efforts to undermine regulatory initiatives led by VCS Michael Barr offer us sad vindication.
Prominent Powell backers also insisted that his apparent commitment to dovish monetary policy set him aside as the only Fed chair who could pursue full employment without upsetting right-wing forces. Another wrong prediction; Powell has since embarked on the most intense and sustained interest hike campaign since the Volcker shock despite evidence showing that he is hampering the green transition, worsening the housing affordability crisis and exacerbating current and future cost-of-living struggles.
Biden erred with his renomination of Powell, but if he gets another chance, he must choose a central bank leader dedicated to properly tackling the myriad challenges facing the Fed, which range from price stability and full employment to financial stability and climate-related financial risk.
For more on this topic, check out our recent pieces on Powell:
Jerome Powell’s Fingerprints Are on the Next Banking Crisis
The Fed’s FOIA Office Is Obscuring Its Trading Scandals
Will Jay Powell’s Cheerleaders Ever Admit They Were Wrong?
To Save the Planet, Biden Should Not Renominate Powell
The Federal Reserve Could Be a Powerful Weapon Against Climate Change
Jay Powell’s Legacy Depends on Whether He Steps Up on Climate Risk
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