Bank of America, Wells Fargo among big banks to undergo Federal Reserve analysis on climate risk
The nation's six largest banks — including Charlotte-based Bank of America Corp. — have until July 31 to disclose to the Federal Reserve how their operations could be impacted by climate change. That's according to new details revealed by the Fed of its pilot climate scenario analysis.
Six of the nation's largest banks, including Charlotte-based Bank of America Corp., have until July 31 to inform the Federal Reserve of how climate change could affect their operations. Banks must explain how unanticipated climate changes such as floods, wildfires, and storms could affect their corporate loans or real estate portfolios. In a news release, the Federal Reserve stated that the climate scenario analysis differs from bank stress tests. These test whether banks have sufficient capital to lend to households or businesses in severe recessions. Michael Barr, vice-chair for supervision, stated that the Fed has limited but crucial responsibilities regarding climate related financial risks. He said this in a statement. Banks are required to collect data on both transition and physical risks. Unexpected climate change could cause physical risks, or harm to property or people. This includes forecasts about how bank's Northeastern U.S. real estate portfolios might be affected. According to CNBC, the pilot was developed around three years ago. According to the Fed, it will publish a summary of program results by the end this year. The Fed stated that the board would not disclose specific responses from banks.