The Independent Community Bankers of America (ICBA), along with state banking associations from 44 starts, is urging the Federal Deposit Insurance Corporation (FDIC) not to allow its proposed statement of principles on climate-risk management for large banks to limit and discourage financial institutions from doing otherwise lawful business with climate-disfavored industries.
“Banks should have the ability to lend to any consumer or corporate citizen who is creditworthy and engaged in lawful activity, without fear of political or regulatory retribution,” ICBA and the state banking associations said in a letter to FDIC leaders.
ICBA and the state banking groups also cited community bankers’ concerns that the potential large bank framework would eventually and inappropriately “trickle down” to small community banks.
The bank officials explained that many small community banks do not have the resources to comply with some of the climate data gathering provisions in the proposed framework.
ICBA and the 44 state banking groups offered some recommendations for the FDIC as it develops its approach to climate-related financial risk management.
Specifically, they suggest conducting studies on the impact of climate change on the banking system, reviewing the FDIC’s nearly 100 years of banking data. Also, they recommend gathering empirical information to better understand the efficacy of the current risk management framework and practices in managing climate-related financial risk. Finally, they suggest addressing any specific gaps in the current framework and the degree to which climate-related financial risk may or may not threaten the safety and soundness of the financial system.
Further, ICBA, in a separate letter to the FDIC, reiterated its concerns that a one-size-fits-all approach to bank regulation is rarely, if ever, appropriate. Climate-related financial risk management is no exception, they added.