[House Report 118-619]
[From the U.S. Government Publishing Office]


118th Congress   }                                         {   Report
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                         {   118-619

======================================================================


 
  PROVIDING FOR CONGRESSIONAL DISAPPROVAL UNDER CHAPTER 8 OF TITLE 5, 
   UNITED STATES CODE, OF THE RULE SUBMITTED BY THE FEDERAL DEPOSIT 
  INSURANCE CORPORATION RELATING TO ``PRINCIPLES FOR CLIMATE-RELATED 
      FINANCIAL RISK MANAGEMENT FOR LARGE FINANCIAL INSTITUTIONS''

                                _______
                                

 July 30, 2024.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. McHenry, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                      [To accompany H.J. Res. 126]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the joint resolution (H.J. Res. 126) providing for 
congressional disapproval under chapter 8 of title 5, United 
States Code, of the rule submitted by the Federal Deposit 
Insurance Corporation relating to ``Principles for Climate-
Related Financial Risk Management for Large Financial 
Institutions'', having considered the same, reports favorably 
thereon without amendment and recommends that the joint 
resolution do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Related Hearings.................................................     2
Committee Consideration..........................................     2
Committee Votes..................................................     2
Committee Oversight Findings.....................................     4
Performance Goals and Objectives.................................     4
Congressional Budget Office Estimates............................     4
New Budget Authority, Entitlement Authority, and Tax Expenditures     5
Federal Mandates Statement.......................................     5
Advisory Committee Statement.....................................     5
Applicability to Legislative Branch..............................     6
Earmark Identification...........................................     6
Duplication of Federal Programs..................................     6
Section-by-Section Analysis of the Legislation...................     6
Minority Views...................................................     7

                          PURPOSE AND SUMMARY

    Introduced on April 5, 2024, by Representative Erin 
Houchin, H.J. Res. 126, a resolution providing for 
congressional disapproval under chapter 8 of title 5, United 
States Code, of the rule submitted by the Federal Deposit 
Insurance Corporation relating to ``Principles for Climate-
Related Financial Risk Management for Large Financial 
Institutions'' would rescind the Federal Deposit Insurance 
Corporation's (FDIC) rule relating to ``Principles for Climate-
Related Financial Risk Management for Large Financial 
Institutions.''

                  BACKGROUND AND NEED FOR LEGISLATION

    On October 30, 2023, the Federal banking agencies jointly 
issued interagency guidance setting principles for large 
financial institutions' climate-related financial risk 
management. These ``principles'' are likely to be abused by 
bank examiners to push banks to channel credit away from carbon 
intensive sectors of the economy to so-called `green' sectors. 
These types of credit allocation decisions are best left to the 
markets and to Congress, not politically unaccountable 
independent agencies.

                            RELATED HEARINGS

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearings were used to develop H.J. Res. 126: The Subcommittee 
on Financial Institutions and Monetary Policy of the Committee 
on Financial Services held a hearing on March 21, 2024, titled 
``Importing Global Governance: Examining the Dangers of Ceding 
Authority Over American Financial Regulation.''

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
April 17, 2024, and ordered H.J. Res. 126 to be reported 
favorably to the House by a recorded vote of 28 ayes to 22 nays 
(Record vote no. FC-141), a quorum being present.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the order to report legislation and amendments thereto. H.J. 
Res. 126 was ordered reported favorably to the House by a 
recorded vote of 28 ayes to 22 nays (Record vote no. FC-141), a 
quorum being present.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      COMMITTEE OVERISGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee, based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the goal of H.J. Res. 126 is to 
rescind the FDIC's rule relating to ``Principles for Climate-
Related Financial Risk Management for Large Financial 
Institutions.''

                 CONGRESSIONAL BUDGET OFFICE ESTIMATES

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Summary of legislation: On April 17, 2024, the House 
Committee on Financial Services ordered reported seven bills 
and six joint resolutions.
    This document provides estimates for three of those joint 
resolutions: H.J. Res. 124, H.J. Res. 125, and H.J. Res. 126.
    Each joint resolution would disapprove a rule published 
jointly in October 2023 by the Office of the Comptroller of the 
Currency (OCC), the Federal Reserve System, and the Federal 
Deposit Insurance Corporation (FDIC).\1\ By invoking a 
legislative process established in the Congressional Review 
Act, each joint resolution would repeal the rule and prohibit 
each agency from issuing the same or any similar rule in the 
future.
---------------------------------------------------------------------------
    \1\Office of the Comptroller of the Currency, Board of Governors of 
the Federal Reserve System, and Federal Deposit Insurance Corporation, 
``Principles for Climate-Related Financial Risk Management for Large 
Financial Institutions,'' Final Rule, 88 Fed. Reg. 74183 (October 30, 
2023), https://tinyurl.com/m68rxv5c.
---------------------------------------------------------------------------
    The rule establishes principles for managing risks related 
to climate change that would apply to financial institutions 
with more than $100 billion in total consolidated assets. The 
rule contains guidance related to those institutions' 
management, policies and procedures, data, reporting, and 
scenario analysis designed to help those institutions 
understand and manage various kinds of risks related to climate 
change.
    Basis of estimate: CBO estimates that enacting any of the 
three resolutions--H.J. Res. 124, H.J. Res. 125, or H.J. Res. 
126--would reduce administrative costs for the affected 
agencies by an insignificant amount. The OCC's and FDIC's 
operating costs are classified as direct spending. The OCC 
collects fees from financial institutions to offset its 
operating costs, which are recorded as offsetting receipts 
(that is, as reductions in direct spending). Costs incurred by 
the Federal Reserve reduce remittances to the Treasury, which 
are recorded in the budget as revenues.
    The CBO staff contacts for this estimate are Julia Aman 
(for the Office of the Comptroller of the Currency and the 
Federal Deposit Insurance Corporation) and Nathaniel Frentz 
(for the Federal Reserve). The estimate was reviewed by H. 
Samuel Papenfuss, Deputy Director of Budget Analysis.
                                         Phillip L. Swagel,
                             Director, Congressional Budget Office.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives, the Committee adopts as its own the 
estimate of new budget authority, entitlement authority, or tax 
expenditures or revenues contained in the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1973.

                       FEDERAL MANDATES STATEMENT

    Pursuant to section 423 of the Unfunded Mandates Reform 
Act, the Committee adopts as its own the estimate of the 
Federal mandates prepared by the Director of the Congressional 
Budget Office.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         EARMARK IDENTIFICATION

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
Federal program, including any program that was included in a 
report to Congress pursuant to section 21 of the Public Law 
111-139 or the most recent Catalog of Federal Domestic 
Assistance.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

    This Joint Resolution disapproves the rule submitted by the 
FDIC relating to ``Principles for Climate-Related Financial 
Risk Management for Large Financial Institutions'' and asserts 
that such rule shall have no force or effect.

                             MINORITY VIEWS

    We oppose H.J. Res. 126, as it is a Congressional Review 
Act resolution that would rescind the Federal Deposit Insurance 
Corporation's (FDIC) portion of interagency guidance for large 
banks to better manage climate-related risks issued by the 
FDIC, Board of Governors of the Federal Reserve System's (Fed), 
and the Office of the Comptroller of the Currency's (OCC) on 
October 24, 2023.\1\
---------------------------------------------------------------------------
    \1\Federal Reserve, Joint Press Release: Agencies issue principles 
for climate-related financial risk management for large financial 
institutions (Oct. 24, 2023).
---------------------------------------------------------------------------
    The climate crisis is worsening, with record-breaking heat, 
floods, storms, droughts, and wildfires hitting communities 
across the nation. In 2023, the U.S. experienced 28 separate 
weather and climate disasters that each cost at least $1 
billion.\2\ Proponents of this bill deny these very real 
threats faced by Americans, even though many companies 
throughout the U.S., including large banks, already recognize 
the existence of climate-related financial risk. This is one of 
the three resolutions House Republicans are advancing that 
would eliminate sensible guidance containing steps large banks 
can take to ensure they have updated risk management systems 
that account for climate-related risks. Financial institutions 
are likely to be affected by both physical and transition risks 
linked to climate change. These interagency principles are 
designed to support existing efforts by large financial 
institutions with strengthening climate-related risk 
management.
---------------------------------------------------------------------------
    \2\NOAA, 2023: A historic year of U.S. billion-dollar weather and 
climate disasters (Jan. 8, 2024).
---------------------------------------------------------------------------
    Specifically, the interagency guidance provides the largest 
banks with more than $100 billion in assets with a high-level 
framework for the safe and sound management of climate-related 
financial risk exposures. The interagency principles cover six 
areas: governance; policies, procedures, and limits; strategic 
planning; risk management; data, risk measurement, and 
reporting; and scenario analysis. It describes how large banks 
can address specific prudential risk areas, including credit, 
liquidity, other financial risks, operational, legal and 
compliance, and other non-financial risks. monitor and their 
ability to identify, measure, monitor, and control these risks 
can be a detriment to the institution's safety and soundness. 
We would highlight that the principles contained in the 
guidance neither prohibit nor discourage large banks from 
providing banking services to customers of any specific class 
or type, as permitted by law or regulation.
    The banking regulators interagency guidance is one step 
financial regulators are taking to better monitor and mitigate 
financial threats related to climate risk. President Biden 
issued Executive Order (EO) 14030 in May 2021 on climate-
related financial risk.\3\ One section of EO 14030 directed the 
Treasury Secretary to work through the Financial Stability 
Oversight Council (FSOC) to assess and develop plans to 
mitigate systemic risks posed by climate-related financial 
risk. In October 2021, FSOC issued a report identifying climate 
change as an emerging and increasing threat to U.S. financial 
stability.\4\ The report identified four areas where it 
encourages FSOC members to act: building capacity and 
expertise, filling climate-related data and methodological 
gaps, enhancing climate-related disclosures, and assessing (in 
order to then mitigate) climate-related risks.\5\ This 
interagency guidance is responsive to FSOC's report, 
identifying ways the U.S. financial system should better 
monitor and mitigate climate-related financial risks. Since 
this bill is a CRA resolution that would rescind the October 
guidance, it would also prevent the FDIC from issuing similar 
guidance in the future without further action by Congress. This 
would make it harder for regulators to promote the safety and 
soundness of banks, as well as financial stability.
---------------------------------------------------------------------------
    \3\White House, Executive Order on Climate-Related Financial Risk 
(May 20, 2021).
    \4\Treasury, FSOC Report on Climate-Related Financial Risk (Oct. 
2021).
    \5\Ibid.
---------------------------------------------------------------------------
    Numerous groups also oppose this bill, including Americans 
for Financial Reform, Ceres, Earthjustice, Environmental 
Defense Fund, Public Citizen, Sierra Club, and Unlocking 
America's Future.
    For these reasons, we oppose H.J. Res. 126.
            Sincerely,
                                   Maxine Waters,
                                           Ranking Member.
                                   Nydia M. Velazquez,
                                   Brad Sherman,
                                   Gregory W. Meeks,
                                   David Scott,
                                   Stephen F. Lynch,
                                   Al Green,
                                   Emanuel Cleaver II,
                                   Jim Himes,
                                   Bill Foster,
                                   Joyce Beatty,
                                   Juan Vargas,
                                   Sean Casten,
                                   Ayanna Pressley,
                                   Rashida Tlaib,
                                   Sylvia R. Garcia,
                                   Nikema Williams,
                                           Members of Congress.

                                  [all]