Climate Activist Plan to Use Dodd-Frank Banking Laws to Force Fossil Fuel Divestment

Guest essay by Eric Worrall

According to Vox, the Obama era Dodd-Frank banking laws will provide a future Democrat President with all the power they need to force banks to abandon fossil fuel companies, without needing approval from the other branches of government.

The next president can force the financial sector to take climate change seriously

With the help of Dodd-Frank, the president won’t need Congress.By David Roberts  Feb 7, 2020, 10:20am EST

growing chorus of voices is warning that the financial system — big banks, insurers, and other asset managers — is highly vulnerable to climate change. As Mark Carney, head of the Bank of England, explained in a 2018 speech, climate change threatens financial stability in three ways.

Existing Dodd-Frank authorities give the president wide latitude to address climate

This new school of thought, that regulators should take a more active role in systemic stability, is known as “macroprudential regulation.”

Notably, the major concepts involved in macroprudential regulation, like “systemic risk” and “stability,” were left almost entirely at regulators’ discretion to define. As with the Clean Air Act’s vague definition of “pollutant,” the idea was that regulators’ understanding of system risk and stability would evolve over time, as would regulations.

It would be straightforward for regulators to require that climate change be integrated into “risk weights,” such that investments in large emitters and industries vulnerable to the effects of climate change are rated as riskier, diverting capital.

An ambitious suite of executive actions to address climate change might not be an inspiring thing to campaign on, but every candidate should be thinking about one. Executive powers are broader than Democrats tend to appreciatebroader than Obama ever used, and broader yet in the wake of Trump. (See this package from the American Prospect on how the next president could use those powers.) 

Executive action could do a great deal to accelerate some of the social tipping points that will be necessary to trip the US into rapid action on climate change. The financial system already seems on the verge of such a tipping point. An ambitious president could push it over the threshold.

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A point the author overlooks is this apparently unconstrained Presidential power to dictate to the banking system works both ways.

On the basis of the argument presented, any President can unilaterally upend the banking system, including the current President. President Trump could use Dodd-Frank to rule that investments in renewables are high risk; the collapse of Solyndra and other large renewable failures provides ample evidence to back such a claim.

But should this Dodd-Frank power be used? Should it even exist?

President Trump does not support Dodd-Frank, and has no plan to abuse this power to bypass legislative oversight, even in the face of provocations from a Trump derangement syndrome obsessed Congress. In 2017 Trump pledged to dismantle the Dodd-Frank law, and in 2018 Trump signed an act to exempt “dozens of banks” from Dodd-Frank oversight.

President Trump appears to recognise Dodd-Frank for what it is – a grossly overpowered financial executive enabling act, a panic response to the 2008 GFC, which should never have been passed. Whatever short term gain could be achieved by exercising such power to achieve policy objectives, even policy objectives many of us support, would be more than offset by long term damage such an exercise of arbitrary executive power would cause to America’s reputation as safe place to invest.

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Zig Zag Wanderer
February 7, 2020 6:20 pm

Fine. Cheaper for more sensible investors.

Reply to  Zig Zag Wanderer
February 7, 2020 6:33 pm

…. and themselves too. They can buy their own stock back. More wealth disparity for people who aren’t idiots and the people who are.

Reply to  Zig Zag Wanderer
February 7, 2020 8:26 pm

You are thinking too small. The regulators can also use such regulations to prevent banks from loaning money to fossil fuel companies as well.

Reply to  MarkW
February 8, 2020 2:27 am

So the US military no longer needs ‘fossil’ fuel ? Sun and wind powered aircraft carriers ?

Reply to  Robertvd
February 9, 2020 3:16 pm

Carriers are nuclear powered and can run around without a drop of fossil fuel. It’s their planes that will need to be sun and wind powered.

Richard Miller
Reply to  MarkW
February 8, 2020 2:11 pm

Does it apply to foreign banks? Who is thinking too small?

tsk tsk
February 7, 2020 6:29 pm

Vox quoting the Atlantic on Trump’s abuse of power via rhetoric is like a kindergartner citing a 3rd grader on recess “who started it.”

Joel O'Bryan
February 7, 2020 6:38 pm

These same Socialist-Democrat idiots thought the climate change scam gave a Democrat President the wide latitude to up-end the US electricity power generation mix and force the states to do the Fed’s wishes without the involvement of Congress. The Obama Maladmin’s plan for this was called the Clean Power Plan (CPP). That is exactly what this Vox idiot thinks — that a Democrat President can make-up stuff out of thin air and use it to further a Progressive agenda towards socialism.

Any such idea that the US President can dictate the banking sector’s investments in fossil fuels is along the same grand idea that a President can do anything he/she wants without the consent of Congress. Of course, as long as it’s a Democrat doing it. It would fail immensely on a court challenge with a US Supreme Court that adheres faithfully to the Separation of Powers doctrine.

Exactly four years ago, the Supreme Court put a “stay” (a court-ordered hold) on the CPP’s major violation of separation of powers doctrine by President Obama. The Supreme Court majority most certainly would have fully slapped CPP down if the actual trial case had ever reached them on appeal. The CPP was loosely based on a huge stretch of the Clean Air Act allowing the EPA to regulate air pollutants. But it was far beyond anything Congress ever intended or actually put in the law that was passed.

Curiously, one week after that Supreme Court “stay” on the CPP, conservative Associate Justice Scalia unexpectedly died, with a pillow found over his head in bed at a private hunting lodge in West Texas. The Dems were joyous at his death and prospect their climate scam roadblock problem at the Supreme Court had been solved.

Senate Majority Leader Mitch McConnell made what was probably The Most Consequential Political Decision of the 21st Century. Senator McConnell, using his control of the Republican’s majority vote in the Senate, denied Obama the chance to fill that Scalia-death vacancy and prevent the Democrats’ their swing of the Supreme Court majority to the Liberal’s likings. And exactly because the Supreme Court majority was in play in the November 2016 Presidential election, probably many more conservatives showed up to vote for Trump.

So now this Dod-Frank gambit would certainly fail with a conservative Supreme Court.
Which is why the current batch of Democrats/Socialists/Marxists running for President via their DNC nomination fully plan to pack the Supreme Court with 4 additional Supreme Court justices if they can get control of both Congress and the Presidency.
And if that were to happen, everything would be lost. A Supreme Court that ignores the the written letter of the Constitution means anything goes. Lawless socialism.

They could sweep away the Electoral College with a Liberal Supreme Court without the states able to stop it. They could force the 50 states to alter voting rules to ignore the 14th Amendment and allow anyone in the US to vote. And they could force banks to not only divest, but also stop lending, to fossil fuel ventures.

All to pay-off the Green Slime billionaires who would profit handsomely with their investments in the renewable energy scams. And the Marxist-Democrats plan to use every dirty trick they can to grab power and hold it, and change the rules and the Supreme Court so they can never be tossed out again by the American voters.

Reply to  Joel O'Bryan
February 7, 2020 8:27 pm

Democrats want the president to be a dictator. But only when their guy is in office.

Reply to  MarkW
February 8, 2020 1:08 am

Liberals love democracy, when they win…..

Reply to  MarkW
February 8, 2020 11:21 am

The US had a Dictator when Obama was President. But yes, I really think that is the future. Trump has slowed it down or delayed it, but I’m sure it will happen and these Marxists will ensure they are never turfed out. Same problem in the UK. Boris will hold them off for a while, but not for ever more. Marxism will be the future, God forebid. Hopefully I’ll be dead before it happens.

Reply to  keith
February 8, 2020 4:27 pm

Boris is a champ greenie

Nicholas McGinley
Reply to  Joel O'Bryan
February 8, 2020 12:35 am

The electoral college is in the constitution.
Do you recall what it takes to change the constitution?
As for packing the Supreme Court…well…FDR had control of the congress and was still unable to do it, and that was during the Great Depression when he had huge support.

These lot are not masterminds…they are barely sentient.
They are now in panic mode because Biden is in trouble, after they caused the trouble for him to reach the boiling point because they wanted to do a futile impeachment with no chance of succeeding.

Just wait.
Watch what happens instead of what you said…night of November 3rd.

Reply to  Nicholas McGinley
February 8, 2020 8:14 am

FDR didn’t need to. His threats to pack the court convinced the conservative justices to stop blocking him.

Nicholas McGinley
Reply to  MarkW
February 8, 2020 12:26 pm

It is no where near so simple.
Events played out over years.
People in key positions died.
Elections occurred.
Even people who were generally ideologically aligned were not prepared to go along with the plan, knowing how short sighted it was to make such changes.
Democrats have often behaved in office like they will never lose another election again.
By the time the war was over, everyone knew it was very dangerous to let one person be President for so !ong.
It takes a very large consensus to an amend the constitution, so obviously even people who voted for and with FDR, then voted never to allow it to happen again that one person could be reelected forever.
Court packing amounts to shredding the constitution and making the President a king.

February 7, 2020 6:40 pm

1 – Dodd Frank is very large and complicated. You can’t really pass judgment on the whole thing. Some parts of it appear to be quite effective. link

2 – Because of a difference in banking regulations, Canada did much better than America at weathering the GFC. link

The argument has been made that the GFC was worse because of the failures of the SEC and the credit rating agencies. In that light, it really doesn’t matter what the laws are if the watchdogs are asleep at the switch.

Joel O'Bryan
Reply to  commieBob
February 7, 2020 7:18 pm

Iceland’s financial meltdown was an excellent test case for letting Too-big-to-fail actually fail and having a currency that could be allowed to devalue, to actually devalue. Unlike Greece trapped in the Euro, it couldn’t devalue.
Iceland has recovered much more quickly than expected.

Reply to  Joel O'Bryan
February 8, 2020 1:14 am

Yes and a bunch of people went to jail. link

February 7, 2020 7:13 pm

No. It shouldn’t exist. It’s blatantly unconstitutional. Any 9th grader should be able see that. The court, eventually (I hope), take action to deep-six it.

February 7, 2020 7:14 pm

there are multiple problems ant they started with:

1) Universal suffrage. Who should have right to vote? who should have access to political power and change laws? Well if you give right to vote to communist, socialist, fascists or to people without skin in the game eventually you get what you have today –insane and lunatic in charge.

2) Fiat money and central banking gave us big and powerful government that can do all this idiocy on the large scale.

Reply to  max
February 8, 2020 1:09 am

And there was me thinking ‘Universal suffrage’ was the pain endured by the population as a result of the policies of the politicians the sheeple have just voted in !

Reply to  max
February 8, 2020 2:23 am

(not)Federal Reserve Central banking gave us direct taxation and made We The People slaves. Since 1913 the people no longer are in control. This is also the system behind the unlimited funding of the climate hoax. These are the wizards behind the curtain the money changers from the temple.

Reply to  Robertvd
February 8, 2020 8:16 am

It was the 16th ammd to the constitution that permited direct taxation. The Federal Reserve had nothing to do with it.

Reply to  MarkW
February 8, 2020 10:00 am

Ooh, clever/sly bit of anti-semitism. Money changers from the temple. Eh?

Reply to  MarkW
February 8, 2020 10:10 am

Correct but it was originally only for the wealthy, the 1 procent.

February 7, 2020 7:15 pm

“Executive action could do a great deal to accelerate some of the social tipping points that will be necessary to trip the US into rapid action on climate change. ”
And when the inevitable economic consequences slam down on the people, it would trigger the social tipping points that would inspire them to look at the science, convert to skeptics and throw the bastards out of office forthwith. And that would be the end of the global warming scam, once and for all.

Reply to  Art
February 8, 2020 8:18 am

The liberals will blame conservatives and capitalism for all the problems. A majority of the myrmidons will believe them. The result of the chaos will be even more power for government.

Walter Sobchak
February 7, 2020 7:16 pm

Sigh. More people who do not know what they are talking about rave on.

No Dodd Frank does not confer unlimited power on the executive branch to manipulate the banking system. The regulators lost one of their first big battles when the a court ruled they had no jurisdiction over Met Life. There really is a rule of reason.

The powers conferred are not conferred on the President. they are given to various bank-regulatory agencies, such as the Federal Reserve Board. Those agencies always have agendas of their own. One of the most important will be to ensure the survival and prosperity of the industry they regulate. They will never cut off a profitable line of business in order to pursue a goal of another department.

Finally, if regulated banks are not permitted to invest energy businesses, then hedge funds will take their places.

And for another thing. Energy businesses may be unpopular in New York and San Francisco. But, they are very popular in Houston and Dallas and the mid-west and mountain states. I don’t care who the president is, if a large enough block of Senators get balky he won’t be able to act.

carbon-based life form
Reply to  Walter Sobchak
February 8, 2020 5:27 am

Thanks for the level-headed response, Walter.

Tom Abbott
February 7, 2020 8:17 pm

From the article: “President Trump appears to recognise Dodd-Frank for what it is – a grossly overpowered financial executive enabling act, a panic response to the 2008 GFC, which should never have been passed.”

Well, if Trump wins election in Nov. 2020, and the Republicans hold the U.S. Senate and win back the U.S. House of Representatives then Trump will have an opportunity to modify a whole lot of things in the law that are causing us problems.

There is a pretty good chance all this will happen. Trump said the other day he was going to personally campaign against various Democrats in House races, and that will make a lot of difference because Trump is a pretty good campaigner.

The Democrats have made a big mistake by pursuing their fraudulent impeachment process. They have shown their true, ugly face to the People.

Reply to  Tom Abbott
February 8, 2020 1:10 am

I always enjoy the left being honest. A few people catch on each time, how ugly their views are.

Reply to  Tom Abbott
February 8, 2020 3:43 am

Those in power don’t want the Democrats to win yet. They first want the fake economy to collapse under Trump/Republicans and blame capitalism.
Then they bring full Big Brother dressed up like progressivism/socialism with AOC to save America. They will win the House and the Senate and then they will shown their true, ugly face to the People.
They already own the Climate Jugend. Prepare for the big leap forward.

Ian Coleman
February 7, 2020 10:08 pm

Dodd-Frank (about which I know very little) is probably an overreaction to the subprime mortgage crisis, which really was the result of grossly inadequate regulation of the equities markets. I’m guessing here, because my knowledge of these issues is vague and incomplete.

M__ S__
February 7, 2020 10:12 pm

Dodd Frank should never have been passed.

Nicholas McGinley
February 8, 2020 12:18 am

Not to worry.
In case you missed it, the Democratic Party is in complete melt down mode.
They spend their time pissing off and alienating large chunks of the electorate at every opportunity, and they give themselves plenty of opportunity.
The November elections will be a seismic event, detectable in motion sensors around the world, as election results come in and leftists begin to hurl themselves from windows, into brick walls head first, scream, shout, rant, rave, and explode in fits of soul rending rage.
Just wait and see.
We might even pick up enough senate seats to have filibuster proof majority on budget issues.
Above 17% minority vote for Republicans, and it is game over.
Current polling shows about twice that level of support.
The last time the Democrats ran on issues such as banning guns, legalizing third trimester abortions, or raising taxes, they lost in epic landslides even in normally blue states.
|And that was with just ONE of these issues being demagogued by them.
This time they are doing all three, and so much more.
It looks like it will be either Mr. Heart Attack Socialist Great Grandpa who combs his hair with a balloon, Mayor Cheat, AKA the “I’d rather watch cartoons” man-child who is the failed mayor of a small town in a small state and absolutely zero accomplishments except presiding over a 3x increase in violent crime in his city during his tenure (concert pianist is wonderful, but not high on most people’s list of qualifications for running the economy, government, and military of the most powerful country on Earth), Little Mikey the Plagiarist Billionaire Scold, or perhaps Mitt Romney, AKA Pierre Delecto, The Amazing Suddenly Holy Man, right after he reveals he was only kidding about being a Republican now that he is considered The Most Ethical Man Alive by the party that scorned, vilified, and correctly determined 8 years ago that he was actually a giant walking sack of hyena feces, although without Candy Crowley to biatch slap him around the debate stage he might get uppity enough for Trump to punch him in his throat, figuratively speaking that is.
And at some point John Durham is going to be indicting Lord only knows how many of them for crimes committed during the last cycle and since.
Yeah…that’ll all work out well for them Democrats just fine!

Tom Abbott
Reply to  Nicholas McGinley
February 8, 2020 9:07 am

“And at some point John Durham is going to be indicting Lord only knows how many of them for crimes committed during the last cycle and since.”

Some of these indictments are going to happen between now and the November elections. That will be interesting. Maybe this will derail the Democrat’s Presidential Harrassment Train.

I see where Trump fired Col. Vindiman, the National Security Council Advisor and Obama holdover, who testified against Trump during the impeachment sham. Trump also fired Vindiman’s twin brother, and the U.S. ambassador to the EU, who also testified against Trump during the impeachment hearings.

Trump had to wait to fire these people until after he was acquitted by the U.S. Senate because doing so before would have subjected him to charges by the Democrats of obstruction of justice. Now that Trump has been exonerated and is not under a formal investigation, he should get a list of all the Obama holdovers in the Executive Branch and “neutralize” them by moving them out of sensitive and critical positions..

Tom Abbott
Reply to  Tom Abbott
February 8, 2020 5:09 pm

Correction: Col. Vindman was not fired by Trump, he was reassigned to another job in a windowless office. Just kidding about the windowless office.

Nicholas McGinley
Reply to  Tom Abbott
February 9, 2020 1:42 am

I think they may be shorthanded in Afghanistan.
Just sayin’.

Ed Zuiderwijk
February 8, 2020 1:25 am

The world is full of people eager to tell others what to do with their money.

Flight Level
February 8, 2020 3:20 am

Someone should tell expert them lefties the difference between lavatory service and fuel trucks.

Not sure they will understand though.

Coach Springer
February 8, 2020 6:55 am

I think there is a fundamental misconception at work here that understates the risk of Dodd-Frank. While there is no questioning the damage it can do in conjunction with the wrong President, it may have even more financial power in its constituent bureaucratic agencies (CFPB, Fed, FDIC, SEC) than the DOJ has legal power and it is far more independent of Congress, the President and the courts. You’ve just witnessed what the DOJ can do without that much independence and with a mole hill of risk. And now that “climate change” has wormed its way into accepted political justifications with a life of its own, all they have to do is nod at the precautionary principle and it happens.

Regardless of President, we are likely to see and “accelerat[ion of] some of the social tipping points that will be necessary to trip the US into rapid action on climate change. The financial system already seems on the verge of such a tipping point.”

February 8, 2020 3:40 pm

Yes, the average electorate has no idea what’s in store for them if they continue to vote along the traditional lines of beauty and debate contest characteristics of individuals on a stage instead of Party planks and special interest advocacy armies.

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