“A bill to establish the Climate Financial Risk Committee and Climate Financial Risk Advisory Committee on the Financial Stability Oversight Council.”
No CRS summary available for this bill.
This section establishes in the Financial Stability Oversight Council (FSOC) (1) the Climate Financial Risk Committee to identify and mitigate climate-related financial risks, coordinate across agencies, assist with data analysis, and provide updates on regulatory incorporation of such risks (with staff from Council member agencies led by the Deputy Assistant Secretary and protected from termination except by Congress); (2) the Advisory Committee on Climate Risk (up to 30 members, including 8 climate science experts appointed by specified officials, 8 climate economics or financial risk experts appointed by the Council, and representatives from research institutions, consumer/labor groups, investor networks, and other stakeholders excluding the oil/gas industry) to consult on climate risks, with 3-year staggered terms and removal only by 2/3 Council vote, and directs member agencies to develop climate risk strategies while requiring Council facilitation of best practices and Office of Financial Research analysis; and (3) an annual report (first due 270 days after enactment) assessing climate risks to financial stability, agency expertise and data gaps, insurance trends' effects on credit/housing markets, and risk management by nonbanks and large bank holding companies.
This section directs each Federal banking agency (as defined in 12 U.S.C. 5301)—i.e., the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation—and the National Credit Union Administration to update applicable supervisory guidance to address climate financial risk, including credit, liquidity, market, operational, and reputational risk, for supervised institutions with greater than $50 billion in assets. The Financial Institutions Examination Council must ensure such guidance is coordinated among those agencies and the NCUA and shared with state regulators.
This section directs the Financial Stability Oversight Council to update its regulations governing nonbank systemically important financial institution (SIFI) designations (12 CFR part 1310, subpart B) to specify how the Council will incorporate climate financial risk into those determinations. (As background, FSOC designates nonbank financial companies as SIFIs if they could pose risks to U.S. financial stability, subjecting them to enhanced Federal Reserve supervision and regulation.)
This section directs the Federal Insurance Office to publish a report, not later than one year after enactment of this Act, that (1) assesses the potential impact of climate financial risk on the U.S. insurance sector; (2) provides an update on implementation of recommendations from the office's 2023 report titled “Insurance Supervision and Regulation of Climate-Related Risks”; and (3) recommends ways to modernize and improve regulation and supervision of climate financial risk in the U.S. insurance sector.
This section directs the Federal Insurance Office (FIO), in consultation with the National Association of Insurance Commissioners (NAIC) and State insurance commissioners, to publish not later than one year after enactment a report assessing climate-related risks across State insurance markets and their potential impact on U.S. financial stability, using homeowners insurance underwriting data for calendar years 2023 and 2024. The required data—disaggregated by zip code and covering premiums, policies, claims, losses, limits, deductibles, non-renewals, and cancellations across all lines of business—shall be collected directly from insurance companies pursuant to FIO's data collection authority and consistent with specified Federal Register notices (88 Fed. Reg. 75380) and NAIC data calls. Upon request, FIO shall provide the report and data, which excludes personally identifiable information, to the Senate Committee on Banking, Housing, and Urban Affairs, the House Committee on Financial Services, or relevant State insurance commissioners. Not later than July 1, 2026, and annually thereafter, FIO shall publicly release similar reports covering data for the preceding calendar year.
This section expresses the sense of Congress that relevant federal financial regulatory agencies and the Department of the Treasury, including the Federal Insurance Office as applicable, should (1) join the Network for Greening the Financial System and other international organizations focused on climate financial risk; (2) formally join the Task Force on Climate-Related Financial Risks of the Basel Committee on Banking Supervision; and (3) work with international regulators on climate financial risk whenever possible, consistent with U.S. law.