Administration presents options to control climate risk in mortgages and banking
Biden administration takes action to address risks to the mortgage industry and others related to climate change, publish a 40 page report on Friday on government-wide plans to protect the financial, insurance and housing markets and the savings of American families.
The report outlines steps that could potentially change the mortgage process, stock market disclosures, pension plans, federal government contracts, and government budgeting.
This is a follow-up to a May executive order from President Joe Biden that essentially calls on the government to analyze how the world’s largest economy could be affected by extreme heat, flooding, storms, wildfires. and the broader adjustments needed to tackle climate change.
“If this year has shown us anything, it’s that climate change poses a continuing urgent and systemic risk to our economy and to the lives and livelihoods of ordinary Americans, and we must act now,” Gina McCarthy, National climate advisor to the White House, told reporters.
A February storm in Texas resulted in widespread power outages, 210 deaths and severe property damage. Forest fires have raged in western states. The heat dome in the Pacific Northwest has caused record high temperatures in Seattle and Portland, Oregon. Hurricane Ida hit Louisiana in August and caused deadly flooding in the northeast.
The actions recommended by the Biden administration reflect a significant shift in the larger climate change debate, suggesting that the nation must prepare for the costs that families, investors and governments will have to bear.
The report is also an effort to show the world how serious the US government is in tackling climate change ahead of the United Nations Climate Change Conference which will take place October 31 to November 12 in Glasgow, Scotland.
Among the steps outlined, the government’s Financial Stability Supervisory Board is developing tools to identify and reduce climate-related risks to the economy. The Treasury Department plans to address the risks to the insurance industry and the availability of coverage. The Securities and Exchange Commission is reviewing mandatory disclosure rules regarding the opportunities and risks generated by climate change.
The Ministry of Labor on Wednesday proposed a rule allowing investment managers to take environmental decisions into account in the choices made for pensions and retirement savings. The Office of Management and Budget has announced that the government will begin the process of asking federal agencies to account for greenhouse gas emissions from companies providing supplies. Biden’s budget proposal for fiscal 2023 will include a climate risk assessment.
Federal agencies involved in home loans and mortgages research the impact on the housing market, with the Department of Housing and Urban Development and partners developing information for homebuyers and flood and related risks. to the climate. The Department of Veterans Affairs will also examine climate risks for its home loan program.
The Federal Emergency Management Agency is updating the standards for its national flood insurance program, potentially revising guidelines dating back to 1976.
âWe now recognize that climate change is a systemic risk,â McCarthy said. âWe need to fundamentally look at how the federal government does its job and how we view the financial system and its stability.â