Dem Rep. Casten Tries to Force Fed Chair Powell to Say that ‘Climate Change Presents a Threat to U.S. Financial Stability’

CASTEN When you were ░░░░░░░░ in July I asked ░░░░░░░░ this question I just ░░░░░░░░ to confirm that you ░░░░░░░░ feel the same way ░░░░░░░░ it still your view ░░░░░░░░ the Federal Reserve that ░░░░░░░░ change constitutes an emerging ░░░░░░░░ to U S financial ░░░░░░░░ Powell I guess I ░░░░░░░░ say it this way ░░░░░░░░ wouldn t say that ░░░░░░░░ change is currently a ░░░░░░░░ to U S financial ░░░░░░░░ CASTEN An and emerging ░░░░░░░░ Powell I would say ░░░░░░░░ it may emerge over ░░░░░░░░ as such CASTEN OK ░░░░░░░░ 250 billion of losses ░░░░░░░░ California We ve now ░░░░░░░░ multiple states where the ░░░░░░░░ of last resort is ░░░░░░░░ Reporting today that California ░░░░░░░░ having to bail it ░░░░░░░░ I know we have ░░░░░░░░ difference of opinion on ░░░░░░░░ I don t want ░░░░░░░░ go into that but ░░░░░░░░ the Fed monitoring what ░░░░░░░░ happening to our financial ░░░░░░░░ as those insurers pull ░░░░░░░░ as insurance rates go ░░░░░░░░ and people s both ░░░░░░░░ to property insurance and ░░░░░░░░ cost of insurance are ░░░░░░░░ up Are you monitoring ░░░░░░░░ s happening systemically in ░░░░░░░░ economy as a result ░░░░░░░░ that Powell Yes The ░░░░░░░░ though if the question ░░░░░░░░ is it a threat ░░░░░░░░ the financial stability of ░░░░░░░░ United States That s ░░░░░░░░ the question And of ░░░░░░░░ we re following that ░░░░░░░░ very carefully CASTEN OK ░░░░░░░░ if if if you ░░░░░░░░ monitoring it where is ░░░░░░░░ risk that was being ░░░░░░░░ by the insurance industry ░░░░░░░░ Where in the economy ░░░░░░░░ that risk now live ░░░░░░░░ So insurance companies as ░░░░░░░░ know can cancel policies ░░░░░░░░ not issue them and ░░░░░░░░ can leave states and ░░░░░░░░ re doing a lot ░░░░░░░░ that So where do ░░░░░░░░ risks fall They fall ░░░░░░░░ homeowners and other beneficiaries ░░░░░░░░ they fall on state ░░░░░░░░ and to some extent ░░░░░░░░ federal government But they ░░░░░░░░ t cause large financial ░░░░░░░░ to fail CASTEN Are ░░░░░░░░ seeing shifts in mortgagers ░░░░░░░░ servicers their willingness to ░░░░░░░░ loans to homes as ░░░░░░░░ insurance rates go up ░░░░░░░░ disappear Powell Implicitly if ░░░░░░░░ can t get insurance ░░░░░░░░ there won t be ░░░░░░░░ mortgage So CASTEN OK ░░░░░░░░ I I don t ░░░░░░░░ can t point to ░░░░░░░░ where that s happening ░░░░░░░░ that s that s ░░░░░░░░ where this looks like ░░░░░░░░ s headed CASTEN OK ░░░░░░░░ I mean there has ░░░░░░░░ reports going back several ░░░░░░░░ now that the more ░░░░░░░░ your property is to ░░░░░░░░ risk to fire risk ░░░░░░░░ more likely you are ░░░░░░░░ a bank to offload ░░░░░░░░ on to Fannie and ░░░░░░░░ right We ve seen ░░░░░░░░ data happening So that ░░░░░░░░ raises the question of ░░░░░░░░ and this is maybe ░░░░░░░░ purely academic and wonky ░░░░░░░░ you own a set ░░░░░░░░ cash flows and you ░░░░░░░░ to sell them to ░░░░░░░░ we both have full ░░░░░░░░ I m only going ░░░░░░░░ buy them from you ░░░░░░░░ an accretive value to ░░░░░░░░ extent that I have ░░░░░░░░ lower cost of money ░░░░░░░░ you do right Just ░░░░░░░░ mean sort of like ░░░░░░░░ 101 right So if ░░░░░░░░ own Fannie and Freddie ░░░░░░░░ now because they re ░░░░░░░░ receivership and they are ░░░░░░░░ off a string of ░░░░░░░░ flows to the Treasury ░░░░░░░░ aside the nuances of ░░░░░░░░ the CBO scores all ░░░░░░░░ sorts of things isn ░░░░░░░░ the sale of Fannie ░░░░░░░░ Freddie on the assumption ░░░░░░░░ buyer and seller have ░░░░░░░░ information the same information ░░░░░░░░ both sides of that ░░░░░░░░ if that s accretive ░░░░░░░░ the American taxpayer doesn ░░░░░░░░ that implicitly assume that ░░░░░░░░ have to sell to ░░░░░░░░ with a lower cost ░░░░░░░░ capital than we do ░░░░░░░░ That s I I ░░░░░░░░ your logic there yeah ░░░░░░░░ OK And that would ░░░░░░░░ not be true to ░░░░░░░░ extent I suppose either ░░░░░░░░ the buyer violates every ░░░░░░░░ I had in my ░░░░░░░░ A career of paying ░░░░░░░░ upside as they say ░░░░░░░░ that the buyer lacked ░░░░░░░░ that the seller had ░░░░░░░░ Powell Fair CASTEN OK ░░░░░░░░ what I d like ░░░░░░░░ understand from you is ░░░░░░░░ that create a conflict ░░░░░░░░ interest for the United ░░░░░░░░ government Because if we ░░░░░░░░ if if we have ░░░░░░░░ about climate change being ░░░░░░░░ from our our our ░░░░░░░░ sets and we have ░░░░░░░░ White House that would ░░░░░░░░ to sell Fannie and ░░░░░░░░ are we committed to ░░░░░░░░ markets that depend on ░░░░░░░░ transparent information or are ░░░░░░░░ committed to making a ░░░░░░░░ buck in which case ░░░░░░░░ might want to have ░░░░░░░░ might want people not ░░░░░░░░ be uninformed Is the ░░░░░░░░ committed to to transparent ░░░░░░░░ I guess is the ░░░░░░░░ question And then the ░░░░░░░░ one do you feel ░░░░░░░░ conflict Powell I think ░░░░░░░░ re getting a little ░░░░░░░░ from my from our ░░░░░░░░ at the Fed I ░░░░░░░░ there the idea of ░░░░░░░░ is to get private ░░░░░░░░ this off the balance ░░░░░░░░ of the of the ░░░░░░░░ and and get into ░░░░░░░░ private capital backing it ░░░░░░░░ And CASTEN Sure And ░░░░░░░░ there would be good ░░░░░░░░ for that But if ░░░░░░░░ if that is coming ░░░░░░░░ the expense of value ░░░░░░░░ the American taxpayer we ░░░░░░░░ to be transparent about ░░░░░░░░ Powell Right But we ░░░░░░░░ private sector banks You ░░░░░░░░ We we could make ░░░░░░░░ credit all credit could ░░░░░░░░ made cheaper if if ░░░░░░░░ by the by the ░░░░░░░░ CASTEN I yield back ░░░░░░░░ government, right?”