H.R.2923 - To nullify certain interagency guidance related to climate-related financial risk management for large financial institutions. (119th Congress)
Summary
H.R. 2923 aims to nullify interagency guidance concerning climate-related financial risk management for large financial institutions. The guidance, issued by the Federal Reserve System, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation, outlines principles for managing climate-related financial risks. The bill seeks to prevent these agencies from enforcing or issuing similar guidance.
Expected Effects
If enacted, H.R. 2923 would remove the existing interagency guidance on climate-related financial risk management. This could lead to large financial institutions having less regulatory oversight regarding climate-related financial risks. It may also limit the ability of these agencies to address potential financial instability related to climate change.
Potential Benefits
- May reduce regulatory burden on large financial institutions, potentially freeing up capital for other investments.
- Could prevent what some see as overreach by regulatory agencies into areas beyond their core mandates.
- Might lead to increased investment in sectors disfavored by climate-related financial risk assessments, such as fossil fuels.
- Could be seen as protecting the financial industry from potentially speculative or uncertain climate-related risks.
- May align with a perspective that market forces are better suited to address climate-related financial risks than regulatory mandates.
Most Benefited Areas:
Potential Disadvantages
- Could increase the financial system's vulnerability to climate-related risks, such as extreme weather events and transition risks.
- May reduce transparency and accountability regarding how large financial institutions are managing climate-related risks.
- Could hinder efforts to mitigate climate change by reducing financial institutions' incentives to reduce their carbon footprint.
- Might lead to a misallocation of capital, as financial institutions may not adequately price in climate-related risks.
- Could undermine international efforts to address climate change and promote sustainable finance.
Constitutional Alignment
The bill's constitutionality primarily relates to Congress's power to regulate commerce and oversee the financial system. Article I, Section 8 grants Congress the power to regulate commerce among the states. The bill's attempt to nullify agency guidance could be viewed as an exercise of this power, setting the parameters for financial regulation. However, opponents might argue that it infringes upon the executive branch's authority to implement and enforce regulations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).