The Biden administration’s Office of the Comptroller of the Currency (OCC) has issued new recommendations for banks and other big financial institutions to analyze and manage “climate risk.” According to Townhall, the OCC rolled out its “draft principles designed to support the identification and management of climate-related financial risks by banks with more than $100 billion in total consolidated assets.”
The agency made headlines recently after President Biden was forced to withdraw his nomination of Saule Omarova to head the office due to her radical writings and statements.
Now they will reportedly seek input from financial institutions on the guidelines over the next two months and incorporate it into “future guidance on climate-related financial risk,” which could affect virtually everything a bank does and how it operates.
The OCC claims it aims to alleviate “the harm to people and property arising from acute, climate-related events.” They list severe weather events such as hurricanes and wildfires, changes in rainfall patterns, sea-level rise, and ocean acidification.
Additionally, the guidance wants banks to prepare for “transition risks,” which it defines as “stresses to certain banks or sectors arising from the shifts in policy, consumer and business sentiment, or technologies associated with the changes necessary to limit climate change.” Through the OCC, the Biden administration is pressuring banks to prepare for ambiguous changes that radicals within the administration will likely define.
Pete Schroeder of Reuters called the move “sneaky significant,” explaining that the draft principles “basically say banks should make assessing climate risk a foundational part of their work.”
This OCC announcement seems sneaky significant. The draft principles basically say banks should make assessing climate risk a foundational part of their work (and their supervisors will be expecting them to do so):https://t.co/HD7c0OlGhy
— Pete Schroeder (@peteschroeder) December 16, 2021
In the draft, the OCC states that “A bank’s board and management should demonstrate an appropriate understanding of climate-related financial risk exposures” and suggests “establishing new structures for climate-related financial risks.” It continues, “Management should incorporate climate-related risks into policies, procedures, and limits to provide detailed guidance on the bank’s approach to these risks in line with the strategy and risk appetite set by the board.” It also claims that “Policies, procedures, and limits should be modified when necessary to reflect the distinctive characteristics of climate-related risks and changes to the bank’s activities.”
bulletin-2021-62aWith this vague guidance, the OCC is trying to force major banks into ideological compliance with the Biden administration’s position on climate change by making it a part of everything they do.
Obviously there’s “climate-related financial risk” and betting on future climate can be very profitable or generate considerable loss. This is true of betting on horse races, too, only there you have some idea of the odds. Weather and climate are chaotic; we can’t predict them. We can have nine years without a major hurricane (we did) or years with major storm damage. Betting on the coming ice age back in the seventies made sense if you believed the predictions. Battening down the hatches and trimming sail when the sky gets cloudy is safe, but the ship under full sail that risks weather profits most – or loses most. If we believed the climate forecasters in the nineties, “safety” would have meant investing in davits and lifeboats for Manhattan office buildings. Moving investments out of petroleum extracting and refining, though it may be thought “safe,” is predicated on what the nuts in D.C. will do, not on what the climate will do.
time to stop using financial institutions.
Stop feeding the dragon that is trying to burn you!