Utah Attorney General Sean D. Reyes has joined 15 other state attorneys general in a letter sent to Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell, FDIC Director Martin Gruenberg and Acting Comptroller of Currency Michael Hsu, demanding the Biden administration halt the politicization of the banking industry through climate-related regulations and instead focus the regulatory agencies on true risk management. The letter casts concern that continuing environmental social governance (ESG) policies mandated by Pres. Biden at the expense of risk management led to the failure of Silicon Valley Bank.
“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,” Reyes said. “The administration should refocus regulation on true risk and stop pressuring financial institutions to meet impossible net-zero targets.”
The letter claims that the historic bank failure happened because Biden’s “preferred regulatory posture increased SVB’s exposure to the actual risks that contributed to SVB’s failures.” The attorneys general claim that SVB’s concentration in the politically favored cleantech industry and underinvestment in traditional energy infrastructure, as encouraged and incentivized by the Biden administration, exposed billions of investment dollars to unnecessary risk.
“Financial regulation that promotes environmental activism and ignores true financial risk puts our nation’s entire financial system in jeopardy,” the state officials said.
The attorneys general concluded their letter by expressing concern about the administration’s potential political motivation to bail out SVB.
“[It] suggests that your actions were motivated only by a desire to save the cleantech industry on which the administration is relying to deliver the country its promised climate agenda,” the letter said.