16 GOP AGs warn Biden admin to end climate policies they say caused SVB collapse
The group highlighted SVB's heavy investment in climate-related initiatives, saying that the regulatory incentives to pursue such an investment strategy directly contributed to the bank's failure.
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A group of 16 Republican attorneys general warned the Biden administration on Tuesday about using federal regulators to encourage left-wing political aims, asserting that Washington's current approach contributed to the collapse of Silicon Valley Bank and the ongoing turmoil in the banking industry.
Led by Utah AG Sean Reyes, the group highlighted SVB's heavy investment in climate-related initiatives, saying that the regulatory incentives to pursue such an investment strategy directly contributed to the bank's failure. The group wrote to Treasury Secretary Janet Yellen, Fed Chairman Jerome Powell, Federal Deposit Insurance Corporation (FDIC) acting Chairman Martin Gruenberg, and acting Comptroller of the Currency Michael Hsu.
"SVB’s failure is a warning sign that the administration’s environmental activism in its financial regulation not only ignores real financial risk but increases it. The administration should refocus regulation on true risk and stop pressuring financial institutions to meet impossible net-zero targets," Reyes said in a statement.
"To put it bluntly, the administration’s zealotry in fighting climate change by unwisely—and illegally—attempting to convert federal financial regulators into environmental activists is inextricably intertwined with these bank failures and the fallout from them," the Republicans wrote.
"Your warping of the financial regulatory system undermines both the safe and sound operation of financial institutions and the public’s faith in the fairness and efficacy of the regulatory regime," they continued. "We urge you to change course and refocus your efforts on managing actual financial risk."
While they acknowledged that rising interest rates were a major factor in the firm's failure, the attorneys general also noted that SVB's disproportionate investment in climate-friendly business at the expense of traditional energy "substantially contributed to the inflation those interest rate increases were designed to combat."
"Put another way, rather than decreasing risk to the financial system, the administration’s continued focus on combatting climate change actually increased that risk," Reyes and co. went on.
The letter comes one day after Biden issued the first veto of his presidency, halting a congressional effort to end a Department of Labor rule permitting asset managers to consider environmental, social, and governance (ESG) concerns when making investments. The practice has drawn scrutiny from conservatives who argue ESG investing prioritizes non-financial considerations and poses a potential breach of a firm's fiduciary duties to its investors.
Consumers' Research Executive Director Will Hild celebrated the letter and excoriated the Biden administration for prioritizing ESG investing practices, which he dubbed "woke capitalism," at the expense of economic stability.
"As the situation continues to unfold regarding the collapse of the Silicon Valley Bank, one thing remains clear, businesses that are focused on ESG investing and woke capitalism are putting their consumers at high financial risk," he said. "SVB unapologetically put environmental activism and identity politics over risk management, which led to its demise."
"It is important for elected officials like these Attorneys General to continue to hold the Biden administration accountable for putting a progressive agenda and blatant political ideology over risk management and sound financial policies. This should be a lesson to all companies to start serving their consumers and stop serving woke politicians," he concluded.
Ben Whedon is an editor and reporter for Just the News. Follow him on Twitter.