Bowman: Regulators losing sight with climate risk guidance

In mid-January, Federal Reserve Gov. Michelle Bowman said in a speech to the South Carolina Bankers Association that regulators are losing sight of crucial safety and risks regarding the concern of climate risk guidance imposed on banks.

“In my view, the new climate guidance introduced by the federal banking agencies last year effectively illustrates this lost focus. While perhaps well-intended, this guidance mandates a diversion of limited supervisory resources away from critical, near-term safety and soundness risks. Setting aside differing views about the appropriateness of the content of the guidance, the fundamental question is whether climate change is a core, present-tense risk to safety and soundness — not whether climate change is an important public policy issue,” Gov. Bowman said. “And here, the evidence suggests that climate change is not currently a prominent financial risk to the banking system”

Bowman urged regulators to keep focus on the most pressing risks to banking.