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Behnam said that the financial risks from climate change are comparable to those posed by the mortgage meltdown that triggered the 2008 financial crisis, and plans a major study, putting him on collision course with the Trump administration

Climate change poses major risks to financial markets, US regulator warns

Rostin Behnam, one of five appointed members of the Commodity Futures Trading Commission, at his office in Washington, June 11, 2019 Image: Greg Kahn/The New York TimesWASHINGTON — A top financial regulator is opening a public effort to  highlight the risk that climate change poses to the nation’s financial  markets, setting up a clash with a president who has mocked global  warming and whose administration has sought to suppress climate science.Rostin Behnam, who sits on the federal government’s five-member  Commodities Futures Trading Commission, a powerful agency overseeing  major financial markets including grain futures, oil trading and complex  derivatives, said in an interview Monday that the financial risks from  climate change were comparable to those posed by the mortgage meltdown  that triggered the 2008 financial crisis.“If climate change causes more volatile frequent and extreme weather  events, you’re going to have a scenario where these large providers of  financial products — mortgages, home insurance, pensions — cannot shift  risk away from their portfolios,” he said. “It’s abundantly clear that  climate change poses financial risk to the stability of the financial  system.”Behnam was appointed by President Donald Trump to a seat on the  commission that, by law, must be filled by a Democrat. He said that  unusual status gave him a measure of political protection that other  appointees within the administration might not benefit from.The commission is designed to operate more independently from the  White House than many federal agencies, and legal experts said it would  be difficult, though not impossible, for Behnam’s boss to fire or demote  him.“I have a unique bully pulpit,” Behnam said, sitting in his office in downtown Washington.Experts in government affairs said Behnam’s initiative was unusual.  Historically, presidential appointees on panels like the trading  commission, the Federal Election Commission or the Securities and  Exchange Commission have sometimes quietly pushed back at the  presidential policies with which they disagreed, but “rarely do you see a  commissioner go rogue and public,” James A. Thurber, director of the  Center for Congressional and Presidential Studies at American  University, said in an email.On Wednesday, Behnam plans to detail the formation of a panel of  experts at the trading commission assigned to produce a report on how  global warming could affect the financial sector, potentially having an  effect on food costs, insurance markets, the mortgage industry and other  economic pillars.Because the report, expected late this year or early next, would be a  product of the federal government, it would most likely put Behnam in  direct conflict with the policies of the Trump administration. The  report, which Behnam said he expected would focus in particular on  potential harm to the nation’s agriculture sector, is likely to emerge  at a moment when Trump will be making the case to farm states, which  have been hurt by his crop tariffs, to reelect him in 2020.His interest in the financial effects of climate change, he said,  stems from six years working for Debbie Stabenow, a Michigan Democrat,  on the Senate Agriculture Committee. He left the agriculture committee  in 2017 to join the trading commission. Earlier, he had worked as a  financial trader and a corporate lawyer in New York.A White House spokesman, Judd Deere, declined to comment on Behnam’s plans.Behnam is not the first financial regulator to call attention to the market risks posed by climate change.In 2010, the Securities and Exchange Commission began requiring  publicly traded companies to disclose the risks to their bottom lines  associated with climate change. Coca-Cola, for instance, has noted in  its financial disclosures that water shortages driven by climate change  pose a risk to its production chains and profitability, and several  insurance companies have put out reports noting the risk to the industry  from more frequent extreme weather.In January, California electricity provider Pacific Gas and Electric  declared bankruptcy while facing billions of dollars in liability costs  related to damages from two years of wildfires. Experts said that could  be an early indicator of a wider economic toll from climate change,  which is making wildfires more frequent and destructive. The same month,  the Bank of England said it intended to include climate change in its  “doomsday scenario” stress tests, which the bank runs to ensure it has  enough capital to withstand major financial shocks.In April, financial firm BlackRock, the world’s largest manager of  financial assets, found that investors in electric utility stocks were  quick to sell after extreme weather, setting up a pattern of market  volatility.A coalition of 39 central banks, representing about half the global  economy and including the central banks of England, China, Canada Japan  and the European Union (but not the United States), has convened a  working group to study the effects of climate change on financial  markets.“We understand that climate change causes a big systemic risk,” said  Stefano Giglio, a professor of finance at Yale University who has  published studies with the National Bureau of Economic Research on the  financial consequences of warming. “But right now, we don’t have enough  information, and we don’t have the right financial products to insure  this risk. The CFTC can help give that information and help lay out a  global marker for what we need to do.”Trump has made it a signature priority to roll back climate change  policies. He has announced that he intends to withdraw the United States  from the Paris accord, an agreement among the nations to jointly  address climate change, and he has set in motion legal efforts to weaken  or undo major Obama-era regulations on planet-warming pollution from  power plants and vehicle tailpipes.In addition, a top White House official,  William Happer, has sought to discredit the findings of the 2018  National Climate Assessment, a report produced by 13 federal agencies,  which concluded that the effects of climate change could cause severe  harm across the nation’s physical and economic landscape. The U.S.  Geological Survey has taken steps to limit the use of scientific work  that projects the effects of climate change past 2040 — a move that  scientists say downplays the long-term consequences of rising greenhouse  emissions.And this month, the White House tried to stop the State Department  from including basic climate science in the congressional testimony of  an intelligence analyst. On Tuesday, the House Intelligence Committee  asked the State Department for documents related to the White House  efforts to exclude the testimony.Behnam said he had incidents like these in mind when he decided to  commission the financial risk study. “When I see people being shut down  and muzzled, it concerns me that we are not taking steps to protect the  people of our country with the best facts, the best science, the best  numbers,” he said.

Climate change poses major risks to financial markets, US regulator warns

Behnam said that the financial risks from climate change are comparable to those posed by the mortgage meltdown that triggered the 2008 financial crisis, and plans a major study, putting him on collis

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Climate change poses major risks to financial markets, US regulator warns

Behnam said that the financial risks from climate change are comparable to those posed by the mortgage meltdown that triggered the 2008 financial crisis, and plans a major study, putting him on collis... Read More

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Behnam said that the financial risks from climate change are comparable to those posed by the mortgage meltdown that triggered the 2008 financial crisis, and plans a major study, putting him on collis