Nobody could have predicted

Too bad the Senate blocked nominees who wanted to limit banking and climate risk

Author

Brad Johnson
March 16, 2023

PRESENTED BY THOSE WHO PROTECT AND SERVE

As Hill Heat went to press, some excellent breaking news came in—you can find it below the moorhen.

pretending to regulate banks can be fun: Tester and Warner at nomination hearing for Trump’s pick for Federal Reserve chair Jerome Powell

Last winter, Democratic senators like Jon “Stress” Tester (Mont.), Mark Warner (Va.), Joe Manchin (W.Va.), and Kyrsten Sinema (Ariz.) worked with the GOP slime machine to block President Joe Biden’s nominees Saule Omarova and Sarah Bloom Raskin from holding top banking regulatory positions.

Omarova and Raskin, nominated respectively to be U.S. Comptroller of the Currency and Federal Reserve Vice Chair for Supervision, were guilty of believing we need to strengthen banking and climate regulations. The nominations crashed against Senate opposition quite explicitly on behalf of Wall Street and Big Oil.

One year later, the $209 billion Silicon Valley Bank and the $110 billion Signature Bank have collapsed, and the Biden administration is bailing out the putatively uninsured companies and billionaires who banked there.

One year later, fossil-fuel pollution is giving us freakishly catastrophic storms, floods, and heat, ravaging the United States and the rest of the world. California has been flooded by its 11th major storm this winter, breaching levees and destroying communities. New Englanders are digging out from a storm that dumped feet of snow. Kansas wells are running dry amid epic drought. Argentina and Uruguay are burning up in an unprecedented heatwave, 15°F hotter than the 1991-2020 normal. Deadly floods are ravaging earthquake survivors in Turkey. The death toll from the zombie storm Freddy has reached 190 in Mozambique and Malawi, with more than 22,000 people displaced by winds and flooding.

Apologies are due to Raskin and Omarova. So far, none are forthcoming.

“Maybe we should apologize?” “Nah….”

In November 2021, Hill Heat explained how the Senate vilified Omarova for trying to protect their constituents:

The McCarthyism of Sen. John Kennedy (R-La.) drew the most headlines during Omarova’s confirmation hearing, but any close observer could have noticed that Omarova would have trouble winning unified support from the Senate Banking Committee’s centrist Democrats: Sen. Mark Warner (D-Va.) and Sen. Jon Tester (D-Mont.) devoted their questions to lecturing Omarova over her opposition to their 2018 bill weakening Wall Street protections, while Sen. Kyrsten Sinema (D-Ariz.) did not even bother to show up. 

Thirteen current members of the Senate Democratic caucus helped Republicans pass the 2018 law, which justified lifting key regulatory constraints on banks the size of SVB and Signature with the claim they were small enough to fail.

In 2021, led by Trump pick Jerome Powell, the full Federal Reserve Board signed off on SVB’s acquisition of another bank with the justification that even as it grew, its failure would not pose “significant risk to the financial system in the event of financial distress.”

Soon thereafter, Biden renominated Powell to continue as Fed chair.

At today’s Senate Finance hearing on Biden’s proposed budget, Secretary of the Treasury Janet Yellen explained why the government bailed out the uninsured depositors at the failed banks:

“A bank only gets that treatment if a majority of the FDIC board, a supermajority of the Fed board, and I in consultation with the president, determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences.”

Oops!

The story for Sarah Bloom Raskin is much the same. We at Hill Heat were understandably bullish on her nomination in January 2022:

The nomination of Sarah Bloom Raskin to Vice Chair for Supervision (the top regulatory position at the Fed) is especially welcome news for the climate. Raskin is a hero to many progressives, and she is well-known for visiting job fairs undercover during the Great Recession, making a key post-2008 crisis Wall Street rule stronger by issuing the first regulatory dissent in the central bank’s history, and taking on predatory lenders as Maryland’s banking regulator.

Because of this experience, she is well-positioned to reverse the damage that outgoing Vice Chair for Supervision Randy Quarles did as the first confirmed person to serve in this role.

This time, Senate Democrats at first were on board. But Banking Committee ranking member Sen. Pat Toomey (R-Pa.) and Big Oil took aim at Raskin:

In a genuinely unhinged letter released Friday, nearly all of U.S. oil and gas lobbying groups (there are many) claimed her recent New York Times op-ed on the teetering fossil-fuel industry showed “poor judgement and a crisis mentality ill-suited for sober, balanced regulation of the banking sector.”

Republicans even boycotted the nomination vote to block her approval. As Jane Mayer covered, the next step was Joe Manchin pulling the plug:

Bloom Raskin’s fate was sealed on Monday, when Joe Manchin, the Democratic senator from West Virginia, signalled that he would oppose her confirmation because she “failed to satisfactorily address my concerns about the critical importance of financing an all-of-the-above energy policy to meet our nation’s critical energy needs.”

In January, Powell threw cold water on hopes that the Federal Reserve would take climate risk seriously:

“Without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals. We are not, and will not be, a ‘climate policymaker.’”

Speaking of climate policymakers, you may remember that President Biden just approved a new oil drilling project in the Arctic Circle. Let’s check in on how it’s going there: Scientists have just confirmed that 2005-2007 was the point of no return for thick Arctic sea ice.1

Oops!

Scientists discover “plastiglomerates” on Trinidade, a remote island that is a primary nesting ground for the endangered green turtle.

As Teddy Schleifer reports, when billionaire venture capitalists are under threat of losing their shirts (or at least their wine portfolio), they have Barack Obama and Rep. Nancy Pelosi (D-Calif.) over for dinner and make a call to Vice President Kamala Harris to bail them out, even though their billions were officially uninsured.

However, when normal Americans literally lose their homes to climate disasters like Hurricane Ian, they can’t even get insurance companies to pay up, as Brianna Sacks writes. The companies fraudulently rewrote claims to slash the payouts their customers owed. The Washington Post directly reviewed several claims and found shocking fraud:

The documents show that a dozen policyholders and their families had their Hurricane Ian claims reduced by 45 to 97 percent. The adjusters, attorneys and policyholder advocates allege that the independent adjusting firms were internally lowering estimates under the direction of the insurance carriers who contracted them.

Don’t worry, Gov. Ron DeSantis (R-Fla.) and the GOP state legislators have spent the past few years passing laws to, oh, hmm, “protect and insulate property insurance carriers, largely at the expense of homeowners.”

Oops!

In January, Georgia police officers shot and killed environmental activist Manuel Paez Terán, also known as Tortuguita, a leader of the of the non-violent forest encampment opposing the construction of Cop City. The cops who killed him claimed he had shot first, though they didn’t have their body cameras on. Weird! This week, Paez Terán’s family released the autopsy results, which showed the activist “was sitting cross-legged with their hands in the air at the time.”

Oops!

Moorhens demand moor good news!

BREAKING: After two years of shameful silence, the Department of Justice is honoring a Biden campaign pledge to support climate lawsuits against Big Oil, with a brief submitted today by Solicitor General Elizabeth Prelogar supporting Boulder’s suit against Suncor et al. Emily Sanders has the scoop at ExxonKnews.

Yesterday, the Environmental Protection Agency issued a stronger “good neighbor” pollution rule to restrict smokestack pollution “from power plants and other industrial sources that burden downwind areas with smog-causing pollution they can’t control” across state lines. The EPA expects the stronger rule will “save thousands of lives and result in cleaner air and better health for millions of people living in downwind communities.”

Boston Mayor Michelle Wu is working to put in place a new building code that would “strongly discourage the use of fossil fuels in new buildings, while also designating $10 million to help affordable multifamily buildings become more energy efficient.”

Supported by a National Science Foundation Civic Innovation Challenge award, the Center for NYC Neighborhoods has launched a pilot program to get funds to people very quickly after a flood for immediate post-disaster needs, which can range from buying a generator to mold remediation to temporary housing.

And a new report from Oil Change International has found that the Glasgow Statement made in 2021 by national banks pledging to limit financing of climate polluters has led to an estimated $5.7 billion per year shift away of fossil fuels, thanks to the countries abiding by the pledge. (Ed.: The United States is not one of them, but this is the good news section, so please ignore this parenthetical.)

Hearings on the Hill:

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1 One of the great things about dynamical systems is that it’s impossible to perfectly predict when tipping points will happen but you can clearly identify them after they’ve happened. Some other examples of dynamical systems include the Amazon rainforest, democratic governments, and organized global community.

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