Washington, DC – Congressman Barr released the following statement on the Federal Reserve's summary of its Climate Scenario Analysis (CSA) pilot project, which involved six of the largest banks in the country. The summary outlined how these banks employed climate scenario analysis to assess the resilience of their business models against climate-related financial risks.
“Yesterday, the Federal Reserve Board issued a summary of Vice Chair for Supervision Michael Barr's Climate Scenario Analysis (CSA) exercise that activists and the Network for Greening the Financial System (NGFS) have been demanding from central banks. The exercise involved simulating effects of “plausible future climate and economic outcomes (scenarios), sometimes produced by the activist funded Network for Greening the Financial System (NGFS), and entertaining risks, some of which were vaguely defined. Bad outcomes with a one-in-a-hundred chance of occurring within up to 200 years were considered, as well as things that are "plausible" in the eyes of modelers funding by activists. As is typical with such exercises, an overarching conclusion drawn is that we need more data and models, meaning more funding and work for the NGFS and other activists. Financial institutions have and will continue to perform useful and prudent research and analysis of an ever-changing climate, including so-called "tail-risks." The Federal Reserve's exercise provides little new or useful insights, and its summary represents further steps down the road of the Federal Reserve assuming a role of climate policy setting via bank regulation and credit channeling, all thinly veiled under the guise of guarding safety, soundness, and stability.”
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