The Federal Reserve is prepared to help financial institutions respond to severe weather disruptions, Chairman Jerome Powell said in an April letter that was made public Tuesday.
While addressing climate change is a responsibility that Congress has entrusted to "other agencies, the Federal Reserve does use its authorities and tools to prepare financial institutions for severe weather events," Mr. Powell wrote in a letter to Sen. Brian Schatz, D-Hawaii.
"Over the short term, these events have the potential to inflict serious damage on the lives of individuals and families, devastate local economies (including financial institutions), and even temporarily affect national economic output and employment," Mr. Powell wrote.
Mr. Powell said the Fed looks at severe weather events as a "shock," and not a "vulnerability" because "shocks are typically surprises and are inherently difficult to predict."
Mr. Schatz initially wrote Mr. Powell in January urging the Fed to prepare its supervised institutions for the risks associated with climate change. On Twitter on Monday, Mr. Schatz, who also received responses from the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, said the regulators' responses were insufficient.
"There is no way to say this diplomatically," Mr. Schatz wrote. "Their answers were garbage. The highlights: according to the Fed, severe weather isn't new and climate change isn't their responsibility. The American agencies that oversee the financial system have decided to ignore climate change."
In March, Glenn D. Rudebusch, executive vice president and senior policy adviser in the San Francisco Fed's economic research department, wrote an economic letter that said climate change has a direct and indirect impact on the U.S. economy and presents "relevant considerations for the Federal Reserve in fulfilling its mandate for macroeconomic and financial stability."
