This morning on Capitol Hill Bank regulators are testifying on climaterelated Financial Risks and Monetary Policy. They are appearing before the House Financial Services subcommittee. We will have live coverage here on cspan2 when that hearing gets underway. [inaudible conversations] the committee will come to order. Without objection of the chairs authorized to declare a recess at any time. This hearing is entitled climate risk are financial regulators politically independent . Without objection all members will have five legislative days within which to submit extremist materials to the chair for inclusion in the record. I now recognize myself for four minutes to give an Opening Statement. Federal regulators represented here today have coordinated to promulgate principles for managing climaterelated Financial Risks. The guidance and information requested by the regulators aligned with a 2021 executive order, efforts promoted by the Financial StabilityOversight Council. Chair yellow and recommendations from various international and local governments organizations. The Federal Reserve is extendin extending, extending for this with a mandatory supervisory climate Scenario Analysis and form a formal collaboration with treasurys office of Financial Research on climate data and analysis. Which the board of governors never voted to approve. F secretary yellen has repeated identified Climate Change as an existential crisis and is called a Climate Change quote and emerging and increasing threat to Financial Stability and quote. Following the administrations posture on climate within financial risk, regulators have begun inserting Climate Policies into Bank Regulation and supervision part there is little transparency about regulators climate efforts and what occurs in administration led climate working groups or International Global governance organizations. 4fourmac knows that been attached to this hearing to grasp this lack of transparency and regulatory capture theres also lack of transparency about funding of some of the climate related efforts of the International Organizations including the tangled web of financing associated with a network of Central Banks and supervisors for greening of the Financial System. Theres nothing wrong with regulators wanting to learn more about data methods and analysis or to ask questions of bank about what theyre doing. No one Police Financial institution should ignore not fully understood risks. But we and the regulators know that institutions are already analyzing climaterelated Financial Risks and many large institutions of public facing Information Available describing how their monitoring and managing this risk. Yet summer after an executive order was issued an f sock make pronouncements of the regulars that a sudden need for coordinated public facing corp. To paint a guiding principle for climate risk that Research Says are manageable. Regulators i think the efforts are intended to help banks manage risk that are not yet fully understood even by the regulators. With the underlying premise some of the predigital regulation are better than the private sector picked that seems odd given the fed says must exercise humility about spotting risks and they could even help institutions manage Interest Rate risks. The feds pfister for supervision promises as he did with Silicon Valley banks failure to write a public facing report of his personal of the special assessment of what is climate Scenario Analysis reveals using data that congress will not be able to seek to corroborate his findings. At best existing climaterelated financial risk analysis potential long run correction analogy financial and economic effects of alarming climate futures but to think existing analyses can predict near term effects of projected Climate Change is five, ten or 100 euros out is misleading and false advertising or climate models are typically unwieldy mongrels characterized by cascading uncertainties as a mixandmatch inputs and outputs from economic, climate ocean to which her and other modules to produce questionable numbers with highly questionable predictive content. There are so many degrees of freedom available to climate analysts that like a cooking soup with a cabinet full of spices you can get whatever flavor results you would like to theres nobel prizewinning economist boris hansen councils to regulars and sector banks quote their credibility will be further enhanced by avoiding the temptation to exaggerate our understanding of Climate Change and quote. On Climate Policy driven by Biden Administration directives, regulators are choosing politicized policymaking putting their independence at risk and giving into the temptation to exaggerate our understanding of Climate Change. That yarnell recognizes the Ranking Member of the subcommittee on Financial Institutions and Monetary Policy the gentleman from illinois mr. Foster for an Opening Statement expert thank you, chairman and think to witness her for being here today. Thank you to our regulators properly and thoughtfully responding to the changing risk profiles of the Financial Systems as our world changes the important participant in our Financial System remain well a price of new and emerging risks and to support our regulators help them stay well posture for the truth. History tells us systemic financial risk do not come from politically driven older reaction to emerging risk but rather from regulatory capture properly defined, which is the use political power by economic incumbents to use their political power to restrict the ability of regulators to respond to a new embryo financial threats that powerful incomes may find inconvenient to acknowledge. We saw that most recently in the financial collapse of 2007 which was pursued by more than 20 years of great moderation lasting from about 84 hyphen 2008, low volatility continuously and continuously rising asset prices including home prices that rose faster than gdp but also a Banking System and middle class that became leveraged beyond all reason and an economy completely dependent on contingency rising asset and real estate prices which was obviously unsustainable from First Principles just as it is scientifically unsustainable to continue putting Greenhouse Gases into her atmosphere without suffering severe economic consequences. However, in 2007 as old as many times in our history the political, economic incumbents encourage or forced regulators to keep their heads in the e and so instead of responding to what was then euphemistically called the subprime crisis, at the tip of a much larger iceberg of Systemic Risk come in 2008 the Bush Treasury Department put out a blueprint for financial modernization which incredibly proposed even further deregulation of an already shaky Financial System so the threat of political influence on our financial regulators is real. And Climate Change it does pose Systemic Risks to our nations Financial System. The destruction waged by stronger hurricanes and tornadoes more intense floods and droughts Sea Level Rise and wildfires threatens businesses banks and Credit Unions across our country and when a large swath of the regions businesses of homeowners faced major losses all at once, when it is catastrophic from one of these catastrophic weather systems, Financial Institutions that issue loans or entrance to them entered must swallow large swaths. At activated system i stupidlye regulators must ensure banks are able to weather the literal and figurative storms. On the investment level in order to effectively manage their own risk shareholders must have excellence and information regarding a companys exposure to climate related risks. We cannot allow americans to lose their Retirement Savings because acknowledging the realities of Climate Change has been overshadowed by partisan politics. The federal financial regulars including feet fdc has promulgated regulations to address systemwide investor level risks and i plugged in for doing so for my republican colleagues seems to have called the street from 30 regulations represent a lack of political independence by the agencies that they responding to democratic pressure to raise the alarm about the impacts of Climate Change but however,e danger lies in the other direction in a politically driven under reaction. These rules recognized around climate risk to our Financial System peer if hearings like this one into pushing regulators to bury their heads in the sand and ignore climate risk would create a great economic distortion and risk unnecessary failure of our Financial Institutions. And hard orange ordinary as that inevitably follow strict i applaud episodic and the sec for funk the site and considering the financial risk posed by Climate Change in spite of political pressure and i look forward to hearing from our Witnesses Today to show how we can further increase transparency and mitigation surrounding Financial Institutions climate risk. The gentlemans time has expired. The chair that recognizes that youre of the subcommittee on oversight and investigations and leader of environmental social and Government Working Group the gentleman from michigan mr. Huizinga for one minute. Appreciate you allowing me to attend and wellintentioned but misguided government mandates are nothing new in washington. However the radical shift by this administration to about esg policies into every thousand of our society outside of the legislative process has reached a critical breaking point as making regulators continue to push for the disclosure of climate within information of which have little or no experience with Small Businesses as well as low and middle income families across the country continues to be crushed by soaring costs stemming from President Bidens failed economic agenda for instead of feeding their obsession to become Climate Policy makers often picking winners and losers regulators should focus on sound banking policy that wont e americas driver Energy Independent and increase Economic Opportunity for all the public it will not idly stand by angela bacon regulators on their own to channel channel credit to politically desired sectors bypassing congress to so thank you mr. Jim for allowing me to join your subcommittee and i look forward to hearing from the witnesses spirit the gentleman yields back. The gentleman from california is not here, and so we will move on to witness testimony today we welcome the testimony of mr. Greg coleman. Mr. Coleman is a Senior Deputy comptroller for Large Bank Supervision at the office of the comptroller of the currency ms. Darlene eberle, ms. Epperly is a director division of Risk Management and supervision at the federal Deposit Insurance Corporation dr. Michael gibson, dr. Gibson is director of the division of supervision and regulation at the board of governors of the Federal Reserve system. Mr. Rendell jones, mr. Jones is a deputy executive director of the National CreditUnion Administration. At the audible sister in antarctica the treasurer of coconino county, arizona. Welcome to washington peer thank you for being here thanks to all of you for your service ever taking time to be here for each of you will be recognized for five minutes to give an oral presentation of your testimony here without objection each of your written statements will be made part of the record or mr. Coleman you are not recognized for five minutes to give your oral remarks. German bar, member foster members, thank you for the update to. Today to discuss the option engine committees around climate with financial risk. The emojis is an independent bureau of the department of the treasury and its mission is to ensure National Bank federal Savings Association operate in a safe and sound manner provide for access to Financial Services, treat customers fairly and comply with applicable laws and regulations. Consistent with that mission one of the occs current ungreased effect on climate risk due to the increased frequency, severity and volatility of weather events to affect the value of financial assets, borrowers credit would and the associate risk expected onto the Balance Sheet our focus for this priority is on the largest banks i would like to stress the occ does not and will not tell bankers what customers or legal businesses that may or may not bank but rather we are committed to staying focused on banks Risk Management of climaterelated Financial Risks exist focus is rooted and remanded to ensure National Banks and federal Savings Associations operate in a safe and sound manner. The occ has a purse climaterelated financial risk the same with the agency approaches in emerging risk. To work with the regulated institutions, to determine if they have appropriate processes and procedures in place to address the risk. In december 2021 the occ issued for Public Comment draft principal designed to support identification and management of climaterelated financial risk that occ writing that institutions with more than 100 million in total assets. Limiting the scope of guidance to large bright which have begun to monitor this this emergs intentional because their exposure to may be material. The draft principles describe general considerations related to Bank Government policies, procedures and limits, strategic planning, Risk Management, data and other areas they provide considerations for how climaterelated financial risk can be addressed in the traditional risk categories including credit, liquidity, Operational Risk and others. The agency has defined feedback in all aspects of the draft principles and were continuing to work, consider the comments received are we are working with her interagency called us to determine the next steps in this area. On their own initiative large banks that they can incorporate a climaterelated financial risk in the Risk Management frameworks and policies to understand the climaterelated financial Risk Management programs the occ began reviewing this information in 2022. My testimony describes our initial observations from these fees. In general the large banks we supervise are in various stages of developing processes to measure and monitor the potential exposures to physical and transition climaterelated Financial Risks. I stress Community Banks are not the focus of our climaterelated financial risk efforts to based on decades of experience in the local Communities Community bankers are very fibbing with impacts of weather events upon the customers and business. Further, these banks have long managed the risk of localized weather events present at the occ does not intend our efforts aimed to large bextra trickled out to Community Banks to however, active, close to h