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Agency stance on impact of climate change on credit union industry remains unclear.
As federal financial regulators struggle with how to deal with climate-related issues, the Financial Stability Oversight Council (FSOC) has created an advisory committee to study those issues.
Among the members of the committee announced this week is Julie Renderos, executive vice president and CFO at Suncoast Credit Union in Tampa, Florida.
“In establishing this committee, we will leverage the expertise of those outside of government and work collaboratively to improve our collective understanding of how climate change may impact the financial sector,” Treasury Secretary Janet Yellen said, in announcing the move. “The newly established advisory committee will also ensure that state and federal policymakers hear from leading experts on climate-related financial risks.”
Credit Unions and Climate Change
The NCUA has been struggling with the best way to deal with climate change. As a member of FSOC, agency Chairman Todd Harper supported the group’s 2021 statement that climate issues pose a risk to the financial system.
He singled out credit unions in high-risk areas, saying in March of that year that, “To remain resilient, such credit unions will need to consider adjusting their fields of membership or altering lending portfolios.”
Those comments and other indications that he wanted the agency to seriously consider how to examine climate change as a safety and soundness issue got Harper into hot water with congressional Republicans.
Several of those proposals were included in a draft strategic plan released by the agency. Republican senators and House members from farm states responded with a letter to Harper, stating, “Of significant concern is the Strategic Plan’s discussion of these implications on the agricultural industry, and the potential for new regulations, increased examinations, and scrutiny of credit unions whose field of membership encompasses rural and agricultural communities.”
At the same time, it became clear that Harper’s Republican colleagues, Kyle Hauptman and Rodney Hood, wanted the agency to take a far less aggressive position than Harper, a Democrat, was advocating.
What Happens Next?
The final performance plan for the year takes a much softer tone.
That plan says nothing about increased scrutiny of credit unions in areas facing climate risks.
Instead, it simply states that by the end of the year, the NCUA will issue a request for information from credit union stakeholders about climate-related financial risks.
That request has not yet been issued.
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