Today, Democratic MPs Mondaire Jones from New York, Ayanna Pressley from Massachusetts and Rashida Tlaib from Michigan tabled a bill that would oblige the Federal Reserve to phase out fossil fuel projects. Legislation known as the Fossil Free Finance Act would require major banks and other financial institutions to align their funding with the United States’ obligations under the Paris Agreement and prohibit the funding of all fossil fuel projects after 2030.
“The climate crisis poses an existential threat to every aspect of our society, including our economy and our financial system,” said Jones. “The Federal Reserve has not recognized climate change as a threat. As climate disasters become more frequent and intense, we can no longer afford to watch large banks and other financial institutions invest trillions in the companies that fuel the climate crisis. ”
The world’s 60 largest banks have pumped nearly $ 4 trillion into fossil fuels in the past five years alone, according to a recent one report by a group of climate organizations. This funding not only accelerates the climate crisis and the destruction of the planet, but also brings a lot of volatility into the economic system.
“For too long our federal government has looked the other way while our country’s largest banks fund the dirtiest fossil fuel projects, exacerbate the climate crisis and prepare for a massive climate-induced economic collapse,” said Pressley. “That needs to change. It is time for a financial system that is truly secure, solid, and fair. One that recognizes the existential threat posed by climate change and takes aggressive action to save our economy, save our planet and save lives. ”
Under the proposal, all bank holding companies with assets of more than $ 50 billion and systemically important non-banks (SIFIs) would be banned from funding new or expanded fossil fuel projects after 2022 and all fossil fuel projects after 2030, Congress via Report its progress towards these greenhouse gas emissions targets.
The bill comes amid broader progressive pressure on the Federal Reserve to use its powers to mitigate climate risk in the financial system. Jones, Pressley and Tlaib – along with Reps Alexandria Ocasio-Cortez from New York and Chuy García from Illinois – have called on President Joe Biden to replace current Federal Reserve Chairman Jerome Powell with someone more climate-friendly. Powell’s term ends in February, and Biden is expected to make a decision soon. Though Powell, a Trump-appointed lifelong Republican, enjoys overwhelming bipartisan support and has even won over some leftists, Congress progressives say the climate struggle is too urgent to not nominate a successor.
On the Senate side, Democrats like Ohio Senator Sherrod Brown, who heads the Senate Banking Committee, and Massachusetts Senator Elizabeth Warren, have prosecuted Powell for his regulatory act. Brown told Axios that he has not yet made a decision whether to replace Powell. But Rhode Island Senator Sheldon Whitehouse recently said if Powell “still wants to strike a balance between the warnings of science and the lies of the fossil fuel industry, he must go.” In contrast to the Fed, other central banks such as Japan and the European Union have made the fight against climate change an important aspect of monetary policy.
The Fossil Free Finance Act was also supported by a number of environmental and stakeholder groups, including Sunrise Movement, Sierra Club, Public Citizen, the Revolving Door Project, and Americans for Financial Reform, among others.