LTP News Sharing:
Joe Biden can’t solve pressing issues like the immigration crisis, supply chain failures and rising crime, but his team “is single-minded and persistent when it comes to using federal financial regulators to do their bidding with respect to climate change.”
In a Washington Times commentary, Project 21 Director of Membership Development Donna Jackson and economist David W. Kreutzer of the Institute for Energy Research explain how new regulations sought by the White House could result in “Enron-quality financial statements” that could hurt the American people by “mak[ing] our government less responsive to actual challenges in banking and financial markets.”
In what Donna characterizes as an “all-of-government assault on the financing of industries that Team Biden considers undesirable,” proposed rules from the Federal Deposit Insurance Corporation (FDIC) and Securities and Exchange Commission (SEC) (the latter about which Project 21 submitted public comment) would force financial institutions to factor “climate-related financial risk management” into their reporting and operations, write Donna and David.
This doesn’t make sense to Donna, a former accountant and auditor:
Whether bankers at any level or in any place need to create and adhere to climate policies is a different question than whether there might be man-made climate effects. Exposure of physical assets to weather damage is real and significant, but that does not necessarily make it climate damage or a systemic financial threat.
Should bankers worry about the potential risk posed by possible climate change? A recent Federal Reserve Bank of New York staff report asked the question this way: “How bad are weather disasters for banks?” Their answer: “Not very.”
With historically inconsistent weather and unreliable modeling for future weather trends, Donna and David note that “[n]one of these pose a direct threat relevant to financial decisions.”
This is where the Biden administration enters Enron territory – potentially creating a situation similar to the actions of the energy trading company that spectacularly flamed out in the early 2000s to cause great pain for investors and consumers:
It’s worth noting that Enron and its accountants got into trouble for financial statements out of step with reality. In pursuit of its extreme climate agenda, the Biden administration now wants to mandate essentially the same behavior by requiring potential overstatement of the climate change risks to businesses.
In reality, Generally Accepted Accounting Principles have strict requirements for dealing with material as opposed to nonmaterial risks, as well as known versus speculative risks.
“Eventually, there may be worsening trends in extreme weather that could impose more severe costs on banking risk. Or maybe not,” Donna remarked. “Does the speculative possibility of additional risk require bankers or regulators to address these risks right now?”
Yet all that seems to be on the liberal agenda on Pennsylvania Avenue is “more confusion than clarity for investors, bankers and citizens”
And there seems to be an ignorance on the part of the White House regarding what has happened in world resource development that is both astonishing and hopeful:
In the last 50 years, the world population has doubled, and resource extraction has accelerated. Yet the planet is no closer to resource exhaustion than we thought we were back then. More importantly, virtually every measure of human welfare has improved.
To read the entire commentary – “Don’t Bank on Catastrophic Climate Change” from Donna Jackson and David W. Kreutzer – click here to head to the Washington Times website.
Author: David Almasi