(Washington) The American central bank (Fed) must understand climate risks and help banks deal with them, not determine which sectors they should or should not lend to, according to Michael Barr, chosen by Joe Biden to become vice-president at banking regulation.
Posted at 3:53 p.m.
Mr. Barr has thus adopted a much more consensual approach than Sarah Bloom Raskin, initially chosen, but who had given up for lack of sufficient support in the Senate, on the subject of the role of the central bank with regard to financing in the energy sector in particular. The Republican opposition had expressed concern for the sacrosanct independence of the Fed.
The Fed “must not be in the business of telling financial institutions to lend to a particular sector, not to lend to a particular sector,” Barr said during a hearing Thursday before the Senate Banking Committee. for the confirmation of his appointment.
For him, “the only objective […] should be to understand the risks that the climate could pose to the financial system and to work with financial institutions on measures to manage these risks”.
This former Treasury official, under the Clinton and Obama administrations, on the other hand, is in favor of regulating banks, but “at several levels”.
“The strictest rules should apply to the largest institutions, with a gradual and graduated approach”, he detailed, calling for “be careful with community banks, which are struggling to cope with the regulatory burden”. .
Mr. Barr was one of the architects of the Dodd-Frank law, passed after the financial disaster of 2008 and aimed at better regulating the activity of American banking institutions.
If his appointment is confirmed, after two votes in the Senate – in committee and then in the plenary assembly – his role will be to supervise the activity of financial institutions, from banking giants such as JPMorgan Chase, Bank of America and Citigroup, up to the local banks, the “community banks”.
His predecessor, Randal Quarles, was appointed by Donald Trump to unravel the banking regulations put in place by the Dodd-Frank Act.
President Biden also offered Fed Chairman Jerome Powell a second four-year term, which got a yes vote in the Senate.
Mr. Biden also reshaped the board of governors of the Fed, with several other appointments, also confirmed: Lael Brainard became vice-chairman and Philip Jefferson governor, as well as Lisa Cook, the first black woman in this position.