March 21, 2023
Today, Utah Attorney General Sean D. 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, that connects the dots between the failure of Silicon Valley Bank (SVB) and the Environmental Social Governance (ESG) policies mandated by President Biden. AG Reyes and 15 other state attorneys general are 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.
“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. “The administration should refocus regulation on true risk and stop pressuring financial institutions to meet impossible net-zero targets.”
The letter explains that this historic bank failure happened because President Biden’s “preferred regulatory posture increased SVB’s exposure to the actual risks that contributed to SVB’s failures.” 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 attorneys general conclude 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. 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.”
Read a copy of the letter here.