Federal Reserve says it will leave climate change organization

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WASHINGTON (AP) — The Federal Reserve said Friday that it is leaving an international grouping of central banks that focused on how regulation of the financial system could help combat climate change. The Fed's membership has been criticized by Republicans in Congress.

In a short statement, the Fed said it had “appreciated” working with the Network of Central Banks and Supervisors for Greening the Financial System. But it added that the organization “has increasingly broadened in scope, covering a wider range of issues that are outside of the Board’s statutory mandate.”

The move is another example of the central bank, which is intended to be independent of politics, taking steps that could insulate it from criticism from the incoming Trump administration. Earlier this month, Michael Barr, who headed up the Fed's financial regulatory efforts and was fiercely opposed by large banks, said he would step down at the end of this month as vice chair for financial supervision. He remains on the Fed's governing board.

Stephen Miran, whom President-elect Donald Trump has named as a top White House economic adviser, co-authored a paper last year at the Manhattan Institute that criticized the Fed's consideration of climate change in bank regulation as “mission creep.”

The Fed said it would join the NGFS in December 2020, after President Joe Biden was elected, and was one of the last major central banks to do so. Over 140 central banks and financial regulatory agencies around the world are members.

Participating in the network “is the least that the Fed can do to address climate-related financial risk, and now it’s not even doing that,” said Jeremy Kress, a professor at the University of Michigan's Ross business school that focuses on bank regulation. “Backing away from that is concerning.”

Five of the Fed's seven governors voted in favor of leaving the network, including Chair Jerome Powell. Governors Michael Barr and Adriana Kugler abstained.