Climate Change Financial Risk Act of 2025

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.