EXCLUSIVE – Sixteen Republican attorneys general on Tuesday accused the U.S. Treasury, Federal Reserve, FDIC and Comptroller of the Currency for contributing to the collapse of Silicon Valley Bank (SVB) by prioritizing President Biden’s climate agenda over sound banking practices.
“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,” they 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 added. “We urge you to change course and refocus your efforts on managing actual financial risk.”
Utah Attorney General Sean Reyes and 15 of his colleagues sent a letter Tuesday to Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, Federal Deposit Insurance Corporation (FDIC) Martin Gruenberg, and acting Comptroller of the Currency Michael Hsu following the collapse of SVB this month after suffering $1.8 billion in losses due to bond investments that tanked as interest rates rose. When SVB’s share price crashed 60%, the FDIC stepped to take over the bank’s operations as depositors panicked and rushed to withdraw their money.
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The AGs detailed the Biden administration’s directive to banks to give climate-related risks special treatment and to downplay investment in traditional energy infrastructure, factors that they say led to the demise of SVB and possible other financial institutions in the future.
“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,” Attorney General Reyes told Fox News Digital in a statement. “The administration should refocus regulation on true risk and stop pressuring financial institutions to meet impossible net-zero targets.”
“Before more damage is done, we urge you to turn away from the politicized path and refocus the regulatory agencies on true risk management,” the AGs wrote in their letter.
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The AGs charged that the federal leaders’ “lack of focus on true systemic and prudential risk issues creates concern about the health of the financial system in general, as investors have fled bank stocks in recent days.”
“If this continues, the financial position of banks will further erode, which weakens the financial system,” the AGs said.
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“Banks may be forced to raise additional capital, which may further the perception that the financial system is weak and could ultimately result in a feedback loop of increasing concern that causes real harm to all Americans. This would be the poisoned fruit of your politicization of the financial regulatory function,” they wrote.
The state top cops warned that federal regulators should “publicly direct banks to pursue profitability, liquidity, and prudent risk management, and note that declining to serve customers for failing to comply with unrealistic climate initiatives like achieving net zero by 2050 is a threat to the financial system.”
“You should make clear that no agency, nor any agency personnel, have authority to pressure any bank to increase its exposure of net-zero compliant customers or to decline to do business with companies for not being net-zero compliant,” they wrote.
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“You should also direct banks to stop setting emissions reductions targets that are inherently arbitrary and undermine public confidence in the financial system,” they wrote.
Fox News Digital’s Chris Pandolfo contributed to this report.