Climate Change Financial Risk Act of 2025
New Bill Requires Federal Reserve to Test How Climate Change Could Impact Major U.S. Banks
Stalled
No legislative action in over 90 days.
↔Companion bill: Congress Proposes Climate Stress Tests for Big Banks to Prevent Financial CrashesLegislative Progress
Key Points
- This bill requires the Federal Reserve to study how climate change might hurt the U.S. economy. It focuses on 'stress tests,' which are regular check-ups to see if the nation's biggest banks have enough money to survive major disasters or sudden economic changes.
- The rules would mainly apply to the country's largest financial institutions—those with over $250 billion in assets. These big banks would have to create 'resolution plans' showing they are prepared for risks like rising sea levels, wildfires, and the global shift toward clean energy.
- A new group of scientists and economists would be formed to create three different 'what-if' scenarios. These scenarios would help the government predict how different levels of global warming could impact bank loans, property values, and the overall stability of the financial system.
- Supporters say this is necessary because extreme weather has already cost the U.S. more than $2.9 trillion since 1980. If the largest banks aren't ready for these costs, it could lead to a financial crisis that affects everyone's savings and ability to get loans.
- If a major bank fails these climate tests or doesn't have a solid plan, the Federal Reserve could limit the bank's ability to pay out money to its shareholders. This is intended to make sure banks keep enough cash on hand to stay safe during environmental or economic emergencies.
Impact Analysis
Personal Impact
Life & Work
Small business owners could see mixed effects. On one hand, a more climate-resilient banking system means more stable access to loans and credit. On the other hand, if banks tighten lending standards in climate-vulnerable regions or industries based on stress test results, some small businesses—especially those in fossil fuel-dependent sectors or flood-prone areas—could face higher borrowing costs or reduced access to capital.
Activities
Milestones
Referred to the Committee on Financial Services, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Sent to a congressional committee for expert review. The committee decides whether this bill moves forward.
Introduced in House
The bill was officially filed and given a number. It now enters the legislative queue.
Votes
No votes have been recorded for this legislation yet.
Related News
3 articlesFed ends climate stress tests for major US banks
The Federal Reserve informed major banks including JPMorgan and Goldman Sachs that they will no longer be required to participate in climate stress tests, discontinuing a pilot program initiated in 2023. This regulatory retreat provides the backdrop for new legislative efforts to codify the tests.
Fed announces 2025 stress test scenarios
The Federal Reserve released its 2025 stress test scenarios, focusing on a severe global recession and real estate shocks. Notably, the scenarios do not include climate-related variables, highlighting the gap that the Climate Change Financial Risk Act of 2025 seeks to fill through legislation.
Dems offer climate risk bill as banks stand by fossil fuels
The reintroduction of the Climate Change Financial Risk Act comes amid intensifying partisan debate. Democrats argue regulators are legally obligated to ensure financial stability against climate-driven crises, while Republicans frame such mandates as 'social engineering' by the government.
Source Information
Document Type
Congressional Bill
Official Title
Climate Change Financial Risk Act of 2025
Data Sources
Sponsor
Cosponsors
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