Five progressive US congressional representatives have called on President Joe Biden to replace Jerome Powell as Chair of the Federal Reserve because of his inaction on mitigating climate risk to the US financial system. In a joint statement to Politico, representatives Alexandria Ocasio-Cortez, Rashida Tlaib, Ayanna Pressley, Mondaire Jones and Chuy Garcia warned of the potential catastrophic and irreversible damage from climate change and called for “a leader at the helm that will take bold and decisive action to eliminate climate risk.”
“We urge President Biden to re-imagine a Federal Reserve focused on eliminating climate risk and advancing racial and economic justice,” the lawmakers said. “To move forward with a whole of government approach that eliminates climate risk while making our financial system safer, we need a Chair who is committed to these objectives.” All five signatories to the statement are Democratic Party members of the House Financial Services Committee.
The congressional intervention comes as speculation mounts over Powell’s fate. The Fed Chair’s term expires next February and President Biden is expected to make a decision on his re-appointment in the coming months, with the chosen candidate to be confirmed by the US Senate.
Powell is reported to have broad support within the White House, from Senators of both parties and from Treasury Secretary and former Fed Chair Janet Yellen. However, calls for Powell’s removal are growing, largely because of his weak stance on climate. Yesterday, a coalition of 22 economic, social and environmental justice organisations and academics urged Biden to consider racism and climate change along with employment and economic growth in making his decision on the Fed’s leadership.
“The Fed has already taken action on [climate change] – on the side of polluters,” the groups said in an open letter to the US President that sharply criticised the inclusion of oil and gas firms in the Fed’s Covid-19 Main Street Lending Program. “Today we must have leaders willing to make enemies of those who destabilize our planet. This should be an overriding priority in all of your appointments, and certainly those as important as Fed Governors.”
Fed Governor Lael Brainard has been suggested as a potential replacement for Powell. In contrast to the current Fed Chair, Brainard has been outspoken on climate, and has emphasised that the unpredictable nature of climate change could make conventional and historically-based economic models obsolete. In a speech in March, she spoke about climate change as an ongoing, cumulative process which is expected to produce a series of economic shocks. “Over time, these shocks can change the statistical time-series properties of economic variables, making forecasting based on historical experience more difficult and less reliable,” Brainard said.
In contrast, last week’s Jackson Hole Economic Symposium did not include discussions on climate change, despite an agenda largely focused on economic shocks.
This page was last updated September 21, 2021
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