Climate Change Is Affecting Everything Including Banks?
The Federal Reserve is concerned about how climate change will affect big banks' financial stability and is asking banks to prove how they will handle the fiscal impacts that flooding, severe droughts, wildfires, and heat waves will have on their businesses in the future.
Climate change has become so prevalent that even banks have to prove that they are not affecting the environment. Six of the largest banks in America have been given six months to show the Federal reserve how climate change may affect their bottom lines.
They have to show how their bank will survive under a variety of stress tests, including flooding, severe droughts, wildfires, and heat waves. Each of these stress tests has different levels of severity on their real estate portfolios. The bank will then have to think about the impact that disaster has on its future.
Some banks involved in this stress test include Goldman Sachs, JPMorgan, and Wells Fargo. Environmental activists state that tests like this are well overdue and were completed over two years ago by the Bank of England in the United Kingdom. These activists fear that the tests may not have the level of devastation needed to be accurate.
Regardless of these worries, the Federal Reserve would not publish the individual bank’s results.
While this test is new for the Federal Reserve and the banks, it is just an exploratory exercise, and it is unlikely any new rules or regulations will be created.
Testing for these disasters should be positive, but critics believe there is a negative reason behind these exercises. The federal reserve completing tests like these with banks could be the first step into pushing banks to limit loans and investments to traditional fossil fuel companies instead of newer, greener companies that have innovative and creative solutions to slow down climate change. They are sure that new regulatory requirements will be born from disaster testing like this.
While this speculation is becoming rife, a spokesperson for the Federal Reserve stated that while there will be no new legislation, it is foolish for the public to think that banks and other businesses wouldn’t factor in something so prevalent as climate change.
For the big global players, it seems like the currency in which they do their business is now changing. It looks like microchips, instead of oil, is the new currency of the rich and powerful. Many supercompanies all over the globe are investing heavily in microchip companies. Intel is already in there early. They are building two new chipmaking factories and refurbishing their European factories also. Microchips will be the next critical global resource in the not-so-distant future. Intel has stated that the world needs this as microchips are more geographically based and resilient than oil.
But, it seems like the last number of years have not been good for distributing the world’s wealth evenly. The top 1% of the wealthiest people in the world are getting steadily richer while everyone else is struggling to pay their essential bills. Since the pandemic, the 1%’s fortune has increased by over $20 trillion, while the rest of the population’s money only increased by $16 trillion.
It is crazy that while the Earth and ordinary people suffer, the super-rich accumulates wealth rapidly while not thinking about the consequences it will have on the Earth or the human race.
