Ginny Roscamp, Senior Press Secretary, Federal Communications, Sierra Club, ginny.roscamp@sierraclub.org
WASHINGTON, D.C. – The U.S. Financial Stability Oversight Council (FSOC) has voted to rescind the charters of both its Climate-Related Financial Risk Committee and Climate-Related Financial Risk Advisory Committee, effectively shutting down federal coordination on climate-related threats to the financial system. The move comes as an ongoing climate-driven insurance crisis destabilizes housing markets across the country. At the meeting on September 10, Trump’s members of the FSOC voted to rescind the charters of both committees without opposition.
FSOC was created after the 2008 financial crisis to guard against system-level risks that banks ignore — a crisis that devastated working families while the billionaires and bankers who caused it got bailed out. The Dodd-Frank Act expressly instructs FSOC to identify not just risks to U.S. financial stability resulting from the distress or failure of large financial institutions, but also risks from financial institutions’ ongoing activities or that could arise outside the financial services marketplace.
“Climate risk is financial risk — and FSOC itself has already recognized it as a systemic threat to our economy and markets. Choosing to ignore these risks isn’t just petty political posturing; it makes the financial system more fragile by weakening regulators’ ability to monitor and respond to cross-cutting threats that endanger Americans’ financial security,” said Jessye Waxman, Campaign Advisor for Sierra Club’s Sustainable Finance Campaign. “FSOC was created after the 2008 financial crash to prevent regulators from overlooking system-wide threats. Walking away from climate oversight repeats the same mistakes that left households and markets dangerously exposed before — and will leave Americans even more vulnerable to economy-wide risks."
By eliminating these climate committees, the Trump Administration is abandoning FSOC’s own work showing that climate change is a threat to financial stability and his promise to address skyrocketing costs and lower prices for Americans.
Climate change is a huge risk to the financial system and Americans. Hundreds of billions of dollars in damages from extreme weather and the growing insurance crisis are already skyrocketing prices and driving up the cost of living for every business and American. Every governmental entity and private actor should be putting more resources into managing and addressing climate-related financial risks, not less.
Climate change is exactly the cross-cutting systemic risk FSOC is meant to monitor. As parts of the country become uninsurable, driving inflationary costs onto Americans and businesses, the cascade of effects threatens, currently manifesting in mortgage markets, the kind of systemic financial instability FSOC was designed to prevent.
About the Sierra Club
The Sierra Club is America’s largest and most influential grassroots environmental organization, with millions of members and supporters. In addition to protecting every person's right to get outdoors and access the healing power of nature, the Sierra Club works to promote clean energy, safeguard the health of our communities, protect wildlife, and preserve our remaining wild places through grassroots activism, public education, lobbying, and legal action. For more information, visit www.sierraclub.org.