Florida Banking May 2022

STRAIGHT TALK FROM THE PRESIDENT’S DESK

SHOULD BANKERS BE THE CLIMATE POLICE?

BY ALEJANDRO “ALEX” SANCHEZ, FBA PRESIDENT AND CHIEF EXECUTIVE OFFICER

R ecently FED Board Governor nominee Sarah Bloom Raskin withdrew as President Joe Biden’s pick to be the Federal Reserve’s top bank regulatory member. Democratic Sen. Joe Manchin said publicly he would not vote to confirm her to the Fed Board. Why did this happen? Sen. Manchin was opposed to Ms. Raskin’s views that the nation’s banking industry should act as the “climate police” and limit lending to the fossil fuel related industries. The FBA has been a consistent, firm and clear voice on this issue. We, like everyone, want a clean and beautiful environment in which to live, work and play. There is no question about that. And if the Biden Administration or any other Administration (Democrat or Republican) wants to pass federal laws or regulations to make those industries and companies that rely on fossil fuels illegal, they should, and the banking industry will not bank them. But for Congress and the President to shirk their legislative responsibilities and place the burden on banks to enforce federal environmental guidelines against our customers is not fair, just or right, and would kill the community banking sector in our nation. Simply put, community banks (and many regional banks, too), cannot afford to hire carbon emissions experts to review loan portfolios to enforce such federal environmental guidelines. Let me repeat: it would kill community banks; more banks would merge and even fewer would be started. The current voices of those in charge in Washington are acting to make the banking industry, and others too, the climate police. The Securities and Exchange Commission on March 21 issued a sweeping proposal to require companies, including publicly traded banks, to report the amount of greenhouse gasses they emit, their exposure to climate change risks and the emissions produced by companies that use their products. Federal Reserve Chairman Jerome Powell has also made climate change a focus at the central bank. The

Fed recently joined the Network for Greening the Financial System, a panel of global financial regulators, and has started looking at ways to make the banks it supervises plan for climate change. The FBA has stated our position in meetings in Washington and on Zoom meetings with regulators, elected officials and anyone and everyone we have met with. We have also been firm and consistent in communicating these concerns on national television interviews. As a personal note, I am outraged when I hear people like Drs. Raskin and Omarova (both Biden nominees) proclaim their love for community banks. While they proclaim that love, they propose ideas that would kill community banks. In Dr. Omarova’s case, her manifesto advocated for the transfer of checking and savings accounts from banks to the Federal Reserve Bank of the United States. In effect, that would kill community banks’ source of funding, thereby killing community banks. Dr. Raskin wanted community banks to become the “climate police.” Even Democratic Senators could not stand for this act of hypocrisy and defeated their nominations in the Senate. How can you say you love community banks and then impose costly regulatory burdens that would kill them? Since 1888, the FBA has worked to ensure that the voices and interests of the banking industry are heard loud and clear. This is but another issue where that mission, with your help and participation, is being achieved. But our work has just begun. The FBA will return to Washington this month to sound the alarms that our nation’s banks play a vital role in providing the capital to make Americans home- and business owners. We need banks of all sizes to exist, as each play a different role in enhancing the economic vitality of Americans and the communities they serve. But as the nation’s number of community banks continues to shrink each day, policy makers cannot continue to talk from both sides of their mouths on the impact of these types of regulatory issues.

6 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING