Republican Senator Patrick Toomey said the San Francisco Federal Reserve’s research into topics including climate change and racial justice is “politically charged” and could result in “mission creep” from the independent agency into policy matters usually left to elected officials.
Toomey, the ranking member of the Senate Banking Committee, addressed the letter to San Francisco Fed President Mary Daly, asking for records pertaining to the bank’s seminar on climate economics, racial-justice research and its research and community development expenses from the last 10 years. The San Francisco Fed said it had received the letter and looked forward to discussing the contents with Toomey’s office.
“Several Federal Reserve banks, including the FRBSF, have increasingly been engaged in research on social-policy topics reflective of the political and normative leanings of unelected Federal Reserve Bank officials,” Toomey wrote in a letter Monday. “This approach has inserted the Federal Reserve into the emotionally charged political arena—a place where the Federal Reserve seldom has ventured, and for good reason.”
The letter comes on the heels of one sent by several Republican members of the Senate Banking Committee to Fed Chair Jerome Powell earlier this month questioning climate-based bank regulation. Powell was also questioned about climate-change research and regulation several times in hearings before Congress last week.
The San Francisco Fed is planning a multi-day virtual seminar on climate economics research, starting April 1. Many of the Fed system’s other reserve banks have also been researching the potential consequences of climate change for the economy, and the Fed’s board of governors voted unanimously last year to join the Network of Central Banks and Supervisors for Greening of the Financial System, a group that aims to study the effects of climate change on financial systems.
“The Federal Reserve—we’re not climate scientists, we don’t have the toolkit in the way we’re set up, in our structure, to fight climate change, but we absolutely are responsible for understanding climate risk, the risk to the economy that severe weather events pose, or changing weather poses, and then how to mitigate those risks so that we can continue to deliver our public policy to the American people,” Daly said last week in a virtual event with Northeastern University.
Daly went on to talk about wildfires in her district, which spans across nine western states including California, and how they damage property on which people and banks own mortgages.
In response to questions in Congress about the Fed’s climate-change research and policies last week, Powell said the Fed has a responsibility to look into how it may impact financial institutions, and that climate change will likely have a significant impact on the U.S. economy.