The nations’ top bank cops are prodding major lenders to pump green dollars into low-income neighborhoods. The nudge comes in a final rule that overhauls a decades-old anti-redlining law known as the Community Reinvestment Act. A new provision explicitly offers banks incentives to help low-income communities prepare for climate-juiced disasters, giving them “credit” for such investments when assessing CRA compliance. Think: investments in public green space to ward off extreme heat, or flood control systems in low-lying neighborhoods. The move could prompt the banking sector to pour billions of dollars into climate adaptation as hurricanes, wildfires and drought wallop communities year after year. It’s a “win-win situation” that could boost the resilience of threatened communities while lessening risks for banks’ local lending portfolios, said Tulane University’s Jesse Keenan, a sustainable real estate expert who has advocated for the CRA changes. If a bank invests in infrastructure to protect a coastal town from sea-level rise, for example, it would also protect the bank's other investments in the area, such as mortgages, auto loans and small business loans. “It’s going to force banks to open their horizons,” Keenan said. The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. unveiled the rule the same day they released new, long-awaited guidance on climate-related financial risk. That guidance raises the bar for how the largest banks — those with more than $100 billion in assets — should handle their exposure to extreme weather and the clean energy transition. The political upshot The news comes at a fraught time for financial regulators, who in recent years have launched a range of climate-related efforts. Those efforts have sparked fierce opposition from Republican officials who accuse them of straying into climate policy and attempting to bankrupt planet-warming industries. Some Republican members of the Fed and FDIC aired their own concerns with the proposals Tuesday. FDIC Vice Chair Travis Hill, for instance, did not support the climate guidance, arguing that issuing climate-related guidance is premature and unnecessary. The two actions ultimately received enough support to be finalized. But regulators still appeared eager to head off potential criticism. Top officials spent little time — or, in some cases, no time — highlighting the CRA’s new climate provisions. And FDIC Chair Martin Gruenberg emphasized that his agency “is not responsible for climate policy and does not tell banks which customers to serve."
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