Michael Shellenberger highlighting a New York Fed report which trashes the idea that climate change is a threat to the US financial system.
Guest essay by Eric Worrall
The Real Threat To Banks Isn’t From Climate Change: It’s From Bankers – OpEd
And upon taking office, President Joe Biden warned government agencies that climate change disasters threatened retirement funds, home prices, and the very stability of the financial system.
But a major new staff report from the New York Federal Reserve Bank throws cold water on the over-heated rhetoric coming from activist investors, bankers, and politicians. “How Bad Are Weather Disasters for Banks?” asks the title of the report by three economists. “Not very,” they answer in the first sentence of the abstract.
The reason is because “weather disasters over the last quarter century had insignificant or small effects on U.S. banks’ performance.” The study looked at FEMA-level disasters between 1995 and 2018, at county-level property damage estimates, and the impact on banking revenue.
In other words, disasters are actually good for banks, since they increase demand for loans. The larger a bank’s exposure to natural disasters, the larger its profits.
…Read more: https://www.eurasiareview.com/04122021-the-real-threat-to-banks-isnt-from-climate-change-its-from-bankers-oped/
The Fed report is even more straightforward. The main report is well worth reading, it explicitly spells out they are dismissing the threat of climate change damaging the US banking system.
How Bad Are Weather Disasters for Banks? Number 990
JEL classification: G21, H84
Not very. We find that weather disasters over the last quarter century had insignificant or small effects on U.S. banks’ performance. This stability seems endogenous rather than a mere reflection of federal aid. Disasters increase loan demand, which offsets losses and actually boosts profits at larger banks. Local banks tend to avoid mortgage lending where floods are more common than official flood maps would predict, suggesting that local knowledge may also mitigate disaster impacts.Available only in PDFSource: https://www.newyorkfed.org/research/staff_reports/sr990
Obviously the authors of the report should be cancelled immediately, for going off script by telling the truth.
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