Powell told Congress Fed is preparing for economic 'damage' from climate change

Powell told Congress Fed is preparing for economic 'damage' from climate change
© Stefani Reynolds

The Federal Reserve has taken steps to ensure that banks and other financial institutions affected by a changing global climate will be protected from undue financial burden, Chairman Jerome Powell says.

In a letter to Sen. Brian SchatzBrian Emanuel SchatzWarren introduces bill targeted at food insecurity on college campuses On The Money: Senators unload on Facebook cryptocurrency | Tech giants on defensive at antitrust hearing | Democrats ask Labor Department to investigate Amazon warehouses Senators unload on Facebook cryptocurrency at hearing MORE (D-Hawaii), Powell wrote last month that the central bank stood ready to protect financial institutions affected by severe weather events that result from temperatures rising around the world, according to The Wall Street Journal.

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"Although addressing climate change is a responsibility that Congress has entrusted to other agencies, the Federal Reserve does use its authorities and tools to prepare financial institutions for severe weather events,” Powell wrote, according to the Journal.

“As such, these events may affect economic conditions, which we take into account in our assessment of the outlook for the economy," he added.

Schatz originally wrote to the Federal Reserve in January, according to the newspaper, urging Powell to take steps to ensure that banks affected by severe weather events would be protected, while Powell reportedly echoed testimony he gave in February to the Senate downplaying the importance of climate change in the creation of monetary policy in his response this week.

“In our framework, severe weather events are treated as shocks to the system,” Powell reportedly responded.

“Some potential risks are difficult to quantify and especially if they materialize over such a long horizon that methods beyond near-term analysis and monitoring are appropriate,” his letter continued. “Accordingly, we rely on ongoing research by academics, our staff, and other experts to improve our understanding and measurement of such longer-run or difficult-to-quantify risks.”

Powell has clashed with the White House over rising interest rates for months, and in February sat down with President TrumpDonald John TrumpAmash responds to 'Send her back' chants at Trump rally: 'This is how history's worst episodes begin' McConnell: Trump 'on to something' with attacks on Dem congresswomen Trump blasts 'corrupt' Puerto Rico's leaders amid political crisis MORE for an "informal" dinner where the two discussed the economy.

Trump has criticized Powell since he succeeded Janet YellenJanet Louise YellenTrump puts hopes for Fed revolution on unconventional candidate Fed chief basks in bipartisan praise as lawmakers dismiss Trump attacks New bill will get the labor market running on all cylinders MORE as chair of the Federal Reserve last year, often calling his decision to raise interest rates "crazy."