ICBA to Fed: Consider Impact of Climate Risk Management Proposals

Washington, D.C. (Feb. 6, 2023) — The Independent Community Bankers of America (ICBA) today said it appreciates that the Federal Reserve Board tailored its proposed climate risk management framework to institutions over $100 billion in assets, though the association expressed concerns about the impact of such proposals for community banks.

“While the Federal Reserve Board’s proposed climate-related financial risk management principles are tailored to bank size, complexity, risk profile and operations, ICBA remains concerned that new climate risk management frameworks will trickle down to community banks and inevitably impact the communities they serve,” ICBA President and CEO Rebeca Romero Rainey said today. “Community banks have decades of experience effectively managing concentration risks and responding to extreme weather events and natural disasters in their communities — meaning new and onerous climate risk management frameworks are counterproductive.”

In its comment letter to the Federal Reserve Board, ICBA also:

• Opposed applying any climate-related financial risk framework to community banks with less than $100 billion in assets.

• Expressed concern that the true aim of the proposal may be to effectuate Operation Choke Point by cutting off legal but disfavored industries from the financial system.

• Noted the Fed, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corp. all published their principles without first conducting studies or gathering empirical data.

• Said current risk management practices adequately protect community banks from climate-related financial risks.

• Encouraged regulators to work together on a harmonized approach to climate principles, study the extent to which climate risks pose significant safety and soundness risks, hold community bank outreach meetings and exercises, and expressly inform examiners that banks are not expected to choke off legal customers or industries from the financial system.

About ICBA

The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.

With nearly 50,000 locations nationwide, community banks constitute roughly 99 percent of all banks, employ nearly 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding nearly $5.9 trillion in assets, over $4.9 trillion in deposits, and more than $3.5 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.

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