West Virginia Sen. Joe Manchin announced Monday he wouldn’t support the nomination of Sarah Bloom Raskin, President Biden’s pick as top bank regulator at the Federal Reserve and an outspoken advocate of addressing the risks that global warming poses to the world’s financial systems.
Without the support of Manchin, who continues to hold powerful sway over the 50-50 split Senate, Raskin’s nomination has little chance of passing, dashing the hopes of environmentalists who believed she would help reign in a new era of climate-conscious regulation at what is arguably the world’s most powerful central bank.
Raskin has been unabashedly vocal about her belief that climate change poses an existential threat to the world’s financial systems. “If we ignore climate change, we in essence destroy the economy,” Raskin told lawmakers in March 2020, just as the coronavirus pandemic began to trigger lockdowns around the world.
That stance has drawn ire from Republicans, who say it’s not the Fed’s role to oversee climate issues and have worked for months to derail Raskin’s nomination. It also helped tank support from Manchin, the Democrats’ most conservative senator, who has made his fortune from coal and natural gas companies and has been a major obstacle to President Biden’s climate agenda.
“Her previous public statements have failed to satisfactorily address my concerns about the critical importance of financing an all-of-the-above energy policy to meet our nation’s critical energy needs,” Manchin said about Raskin in a statement Monday.
But a growing number of economists have taken positions similar to Raskin’s, saying that intensifying storms, wildfires, heat waves and droughts are already making it far more difficult for companies to conduct their business without major interruptions. Analysts say global warming also poses a transitional threat, meaning that as governments pass laws requiring the adoption of renewable energy, it could saddle residents with the costs of stranded assets, such as oil pipelines and natural gas power plants, that no longer serve a purpose in the coming decades.
A report released last year by Swiss Re, one of the world’s largest insurance providers, found that by 2050, the effects of climate change could shave as much as $23 trillion off global economic output when compared with growth levels without climate change. And in January, the financial firm Deloitte released a report that said the United States could lose $14.5 trillion over the next 50 years if it continues to delay transitioning its economy to net-zero emissions.
“Ms. Raskin’s outspokenness on climate is completely legitimate because it is an existential threat, and because climate-related shocks do pose threats to financial stability, and to the safety and soundness of financial firms and markets,” Richard Berner, an Obama-era director of the Treasury Department’s Office of Financial Research and co-director of New York University’s Volatility and Risk Institute, told E&E News.
At the Federal Reserve, Raskin would have had a host of tools at her disposal to help address the financial threats from climate change, including setting federal interest rates and designing monetary policy over how banks should treat future investments. Specifically, activists had hoped Raskin would use the Fed’s regulatory powers to stymie the flow of money into the fossil fuel industry and other businesses with significant carbon footprints.
Still, despite Manchin’s opposition, Democrats are moving forward with Raskin’s nomination, holding onto hope that they can convince some Republicans to cross the aisle. Senate Banking Committee Chairman Sherrod Brown (D-Ohio) said Monday that he would push forward a vote on Raskin. And Press Secretary Jen Psaki said the White House was continuing efforts “to garner bipartisan support” for Raskin.
Even without Raskin’s approval, Democrats still have some leverage to push forward climate-related financial regulation. This week, the Securities and Exchange Commission is expected to propose a new landmark rule that would require all publicly traded companies to disclose their greenhouse gas emissions and the climate risks their businesses face. It’s a move that would put the United States more in line with what other countries are already requiring, underscoring just how out of touch some U.S. lawmakers are when it comes to accepting the realities of the climate crisis.
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