00:00The Fed under Jay Powell just got a well-deserved D-minus on climate change.
00:03And if Kevin Warsh takes over, the central bank is likely headed for an F.
00:07The grades come from Green Central Banking, a policy institute that gives letter grades to central banks for their climate
00:11action.
00:12And it doesn't like what's been going on in the U.S.
00:14Over the past 12 years, the country has taken a $7 trillion hit from extreme weather,
00:18making it twice as expensive as the Great Depression.
00:21Partly as a result, U.S. home insurance premiums have soared 69% since 2019.
00:25One word for this is inflation, which is one pillar of the Fed's dual mandate to stabilize prices and maximize
00:31employment.
00:32Meanwhile, there are still yawning gaps in insurance coverage that many homeowners won't discover until after disaster strikes.
00:38This means U.S. houses could be overvalued by as much as $2.7 trillion, more nightmare fuel for the
00:43economy.
00:43Economists see climate change carving anywhere from 20 to 60% from global GDP.
00:48And this is growth that is lost forever.
00:50Yet Treasury Secretary Scott Bessent has called climate change an issue that had no clear nexus to safety and soundness
00:56for the banks the Fed regulates.
00:57Worsh isn't any better. He said the Fed should ignore climate change.
01:00He's dismissed worry as a bandwagon that's fashionable and fleeting.
01:03He's also called it contraband, whatever that means.
01:06What they're both ignoring is that climate policy is financial policy,
01:09something most of the world's other big central banks, like the ECB, the Bank of England, and the Bank of
01:13Japan, have recognized.
01:15Those banks get B and C grades on their report cards.
01:17If the U.S. drops down to an F, it will join Argentina and Russia as the only big central
01:21banks failing on climate.
01:22And that will cost us all.
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