Federal Reserve Chair Jerome Powell on Wednesday defended the Fed’s increasing scrutiny of the threat that climate change could pose to the health of the United States’ banks, after some Republican members of Congress had complained that by doing so the Fed was overstepping its mandate.
Over the past year, the Fed has taken steps to incorporate the risks from climate change into its oversight of the US financial system. A key part of the Fed’s mandate, in addition to setting short-term interest rates to either stimulate or slow the economy, is regulating banks to guard against excessive risk-taking.