‘Big shift’: Biden moves to rewrite the rules on climate threat

Finance & Tax

Joe Biden has tapped Sarah Bloom Raskin, who has called fossil fuels “a terrible investment,” for the Federal Reserve’s top regulatory job. | Andy Wong, File/AP Photo

By Victoria Guida

01/24/2022 11:31 AM EST

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The nation’s top financial regulators will soon embark on a controversial, first-of-its-kind mission: forcing banks and other industry players to prepare for potential threats to the U.S. financial system from climate change.

But they’re facing a maze of obstacles, including blowback from Republicans, before they’ve taken their first steps.

All the leading agencies will be headed by progressive regulators who will seek to push the administration’s agenda forward even as President Joe Biden has failed to get broader climate-related legislation through Congress.

Among other moves, regulators are likely to press banks to prepare for the fallout from a warming planet by stepping up scrutiny of fossil fuel financing. They will make the lenders undergo regular tests to measure how their investments could be threatened by flooding, wildfires and other growing risks. And they could rewrite the rules against the discriminatory practice known as redlining to push lenders to put money into disadvantaged communities most vulnerable to climate change.

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