The politicization of the Federal Reserve continues apace. And no, President Trump isn’t trying to pull some grand last-minute gesture before he leaves office, like trying to fire Jerome Powell or something like that.
Last week, as expected, the Federal Reserve formally joined the Network of Central Banks and Supervisors for Greening the Financial System, the “lone holdout” among the world’s major central banks to join this “forum for central bankers and regulators to come together and discuss how their institutions can ensure their financial systems don’t worsen climate change risks, and how financial institutions might be able to lower those risks,” as the Wall Street Journal described it.
As innocuous as that may sound, it injects the Fed solidly in the middle of what has become increasingly political, namely which companies – and probably, individuals eventually– banks should or shouldn’t lend money or offer their services to.
As we know, several large international banks have been under increasing pressure from shareholder activists to stop making loans to companies in the “fossil fuels” business, namely oil and coal companies and pipeline operators, and the like. And the banks have dutifully buckled under, albeit with a long lead time as to when they will actually cease doing so. Now the Fed will be providing added pressure on the banks to make loans only to those companies favored by the Washington and New York elites – or at least will feel added pressure to do so. Continue reading "The Fed Warms To Climate Change"
