Progressive Groups Demand Biden Appoint Chair Who Will End Fed's Funding of 'Climate Destruction'

A coalition of progressive groups on Thursday urged President Joe Biden to appoint "a real climate leader" to head the Federal Reserve.

"You can't consider Fed leadership without asking how it's doing on the biggest risk to the financial system--the climate crisis," David Arkush, Climate Program director at Public Citizen, said in a statement.

"We demand bold policies that shift power away from fossil fuel billionaires toward our communities, and call on President Biden to nominate a real climate leader who will re-imagine the role of the Fed in climate recovery."
--Tracey Lewis, 350.orgThe Federal Reserve is currently chaired by Jerome Powell, a Republican who was appointed to the board in 2012 by former President Barack Obama and appointed chair by former President Donald Trump.

As Politico noted Tuesday, there's been swelling pressure from the left for Biden not to reappoint Powell for the position. Powell's term ends in February 2022, though Biden is expected to announce a decision as early as late summer about who he's picking to be in that role after February.

"The Fed appointment," Politico reported, "will be the most consequential personnel decision left for Biden in his first term." The outlet continued:

Winning the confidence of investors and businesses will drive economic decisions into the 2022 midterm elections. With razor-thin majorities in Congress, the Fed also could be the lone force providing government support for the economy in the second half of Biden's term if he loses control of either chamber of Congress.

Powell is not without supporters on left. Economist Dean Baker, for example, wrote Wednesday that Powell "brought about a remarkable shift in Fed policy," and welcomed his view of running "the economy in a way that as many people as possible can have job."

The groups behind the new call, however--including 350.org, Climate Hawks Vote, Oil Change International, Public Citizen, Rainforest Action Network, Revolving Door Project, and Sierra Club--say Powell's failure to act sufficiently on the addressing the climate crisis merits his removal.

In their statement, the groups cite as evidence the D- grade the Fed received in the "Green Central Bank Scorecard" released (pdf) in March by U.K.-based group Positive Money.

A supplement (pdf) to that scorecard, authored by Yevgeny Shrago, policy counsel in Public Citizen's Climate Program, accuses the Fed of having "used the magnitude of the [climate crisis] as a call to gather facts and wait for development of better modeling of climate financial risk instead of deploying its authorities to address the issue and learn by doing."

The groups echoed that line of criticism in statements Thursday.

"If the Fed did not begin moving aggressively on Day One of the Biden administration (if not long before that), then the Fed is contributing to the climate crisis," said RL Miller, political director at Climate Hawks Vote. "There is no room any more for baby steps."

Tracey Lewis, senior climate finance policy analyst with 350.org, added, "As Fed chair, Jerome Powell continues to finance climate destruction."

"Instead of supporting Black and Brown communities fighting on the frontlines of Covid-19, racial and economic injustice, and climate devastation who need support to rebuild and recover," said Lewis, "Powell's Fed bailed out the planet-killing fossil fuel industry to the tune of billions."

"We demand bold policies that shift power away from fossil fuel billionaires toward our communities, and call on President Biden to nominate a real climate leader who will re-imagine the role of the Fed in climate recovery," she said.

The demands Thursday are directed at Biden, but Powell himself was urged last month to take greater action to protect the economy from climate risks. A letter to Powell, signed by dozens of groups including ones behind Thursday's demand, read in part:

The [Federal Reserve] Board should not be in the business of rescuing fossil fuel companies without a plan to phase out their contributions to greenhouse gas pollution in accordance with a 1.5degC pathway. Not only did the board buy risky fossil-fuel assets in 2020 without any conditions; its corporate bond purchases were heavily overweight in the energy sector (defined as oil/gas and coal value chain companies exclusively). In addition, over 13% of loans purchased through the Main Street Lending Program to date are for fossil fuels, compared to just 1% for clean energy. Separately, over $1 billion (19.5%) of the Secondary Market Corporate Credit Facility portfolio is composed of bonds from the energy or utilities sector. This is completely the wrong direction. The board must stop exacerbating the climate crisis with its own bond purchases and other rescue programs.

In a statement at the time, 350's Lewis said, "It's unthinkable that banks are still financing new fossil fuel development when we are crystal clear that we are on a path to climate chaos."

"The Federal Reserve must do its job, steering the economy away from disaster by ending fossil fuel finance," she said.