House Committee to Discuss Bills to Slow ESG Efforts by NCUA
Learn why Republicans are aiming to keep financial regulators like the NCUA from addressing Environmental, Social and Governance issues in rulemaking.
Hearing part of Republican effort to keep Environmental, Social and Governance issues out of rulemaking process.
House Financial Services Committee Republicans are considering legislation that would require banking regulators—including the NCUA—to report to Congress on certain climate-related proposals before they are issued by the agencies.
On Tuesday, the House Financial Services Committee’s Financial Institutions and Monetary Policy subcommittee will hold a hearing addressing whether financial regulators are politically independent on climate issues. The hearing is part of the committee Republicans’ efforts to limit the agencies from addressing Environmental, Social and Governance (ESG) issues in rulemaking.
Among those scheduled to testify is Rendell Jones, the NCUA’s deputy executive director.
Backstory and Context
In calling the hearing, House Financial Services Committee Republicans said they are concerned that the financial regulators are trying to incorporate recommendations on climate change through Executive Orders issued by President Biden, working groups led by administration officials, the Financial Stability Oversight Council (FSOC) and by non-governmental organizations.
A task force of committee Republicans recently released a report recommending that Congress rein in any attempts by the agencies to consider ESG issues.
The panel recommended that Congress strengthen “oversight and conduct thorough investigations into federal regulatory efforts that would contort our financial system into a vehicle to implement climate policy.”
This Week’s Hearing
One bill to be discussed by the committee Tuesday would require the NCUA and other regulators to “provide notice to Congress, testimony, and analysis prior to rulemaking that would implement policy recommendations of non-governmental organizations with significant projected economic effects.”
Another draft bill would require the agencies to report “on meetings with non-governmental organizations related to standardization of policies and regulation.”
And a third bill would require the agencies to provide notice to Congress before they implement recommendations made by FSOC or by Executive Order.
Where the NCUA Stands and What Comes Next
The Biden Administration has begun several initiatives encouraging industries to consider ESG issues. In addition, FSOC has issued a report stating that climate change poses a systemic risk to the safety and soundness of banks and credit unions.
NCUA Chairman Todd Harper endorsed the report, which recommended that the agencies consider issuing guidance on how institutions should deal with the issue.
NCUA Republican board members Rodney Hood and Kyle Hauptman have said that climate issues should be considered by individual credit unions and not by its regulators.
However, Hood’s term expires in August and presumably President Biden will nominate a Democrat to replace him. That could give Harper an opportunity to push the agency to adopt a more aggressive climate change agenda.