And you thought the Fed was just about monetary policy.
The Federal Reserve Bank of San Francisco wants banks to get extra credit for making loans that help communities adapt to climate change and prepare for future natural disasters.
A paper released on Monday by researchers at the San Francisco Fed argues that banks should receive credit for climate-adaptation investments under the Community Reinvestment Act, which requires banks to lend to low- and moderate-income communities.
The report represents the latest in a series of small steps by Federal Reserve banks to recognize climate change as a threat to the U.S. financial system.
These are the opening three paragraphs of a news item in today’s Wall Street Journal. It’s Laura Kusisto, “San Francisco Fed Wants to Reward Banks for Combating Climate Change,” Wall Street Journal, June 18, 2019.
The Fed is already the central planner of the U.S. money supply. It now seems to be toying with the idea of becoming a central planner in other areas.
READER COMMENTS
Benjamin Cole
Jun 18 2019 at 7:54pm
The San Francisco Fed has been issuing many left-wing PC papers and comments of late.
On the other hand, the San Francisco Fed has also issued papers that the current unemployment rate is too low. The San Francisco Fed has advised we shoot for about a 5% national unemployment rate as measured by U3.
Somehow the San Francisco Fed has become a sink of noxious ideas from all spectrums of our society.
Alan Goldhammer
Jun 19 2019 at 7:28am
99.99% of all Americans don’t read such musings and don’t even care. This is nothing to get one in a tizzy about as there are so many other high profile issues worthy of economists concern, tariffs being number one on my list.
David Henderson
Jun 19 2019 at 9:31am
I think your 99.99% estimate is probably about right. But I think you and I have a very different view of the political process. It’s precisely because almost no one is paying attention to this that this kind of proposal can slip through.
Mark Z
Jun 19 2019 at 5:40pm
Would you be similarly unconcerned if the St. Louis Fed issued a report proposing that banks be rewarded for refusing to do business with abortion clinics or pro-abortion groups?
Or would a Federal reserve bank stepping going outside its proper domain to manipulate business to enact the favored policies of its leaders then be at least somewhat unsettling?
Yes, there are bigger concerns, there pretty much always are. I don’t think one is only allowed to write about priority #1. If someone thinks monetary policy is what’s most important (not an invalid position), they could pooh pooh any discussion of tariffs as unimportant. If someone thought zoning laws and pushcart vending were the most important issues, they might dismiss any discussion not involving those as well.
gwern
Jun 19 2019 at 12:17pm
Unless the ‘adapt to climate change and prepare for future natural disasters’ includes ‘eliminate new construction and relocate elsewhere’, this sounds like it’ll be flood insurance and New Orleans all over again.
David Seltzer
Jun 19 2019 at 6:16pm
The Federal Reserve’s duties fall into four general areas:
conducting the nation’s monetary policy; supervising and regulating banking institutions and protecting the credit rights of consumers; maintaining the stability of the financial system; and providing certain financial services to the U.S. government, the public, financial institutions, and foreign official institutions. Why is the SF venturing into climate concerns that are clearly not in their charter? Enough already.
Alan Goldhammer
Jun 19 2019 at 7:08pm
Economists with too much free time????
David Seltzer
Jun 20 2019 at 1:00pm
Seems that way Alan. Do they also not understand the time value of money?
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