The attorneys general also expressed concern about the Biden administration’s political motivations to give SVB a bailout
(The Center Square) – Utah Attorney General Sean D. Reyes thinks Environmental Social Governance (ESG) policies mandated by President Joe Biden were a factor in the collapse of Silicon Valley Bank (SVB).
Reyes sent a letter to Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell, FDIC Director Martin Gruenberg, and acting Comptroller of Currency Michael Hsu, arguing that premise. Reyes and 15 other state attorneys general want Biden to “halt the politicization of the banking industry through climate-related regulations and instead focus the regulatory agencies on true risk management,” according to a press release from Reyes’s office.
According to Investopedia, “ESG investing refers to a set of standards for a company’s behavior used by socially conscious investors to screen potential investments.”
“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 said in the release. “The administration should refocus regulation on true risk and stop pressuring financial institutions to meet impossible net-zero targets.”
The letter argues that the bank failure happened because Biden “preferred regulatory posture increased SVB’s exposure to the actual risks that contributed to SVB’s failures.”
It said SVB’s focus on the cleantech industry and underinvestment in traditional energy infrastructure put billions of investment dollars at risk.
“Financial regulation that promotes environmental activism and ignores true financial risk puts our nation’s entire financial system in jeopardy,” the release from Reyes’s office said.
The attorneys general also expressed concern about the Biden administration’s political motivations to give SVB a bailout.
“[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 attorneys general wrote. “But even if that is not the case, your focus on climate change has created that perception, which weakens the financial system generally and undermines faith that financial regulators are solely focused on the economic health of our banking system, as opposed to furthering favored political agendas.”
Originally published by The Center Square. Republished with permission.
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