Gabby Brown, gabby.brown@sierraclub.org, 914-261-4626
Washington, DC - Today, Representatives Jesús “Chuy” García (IL-04) and Katie Porter (CA-45) introduced the Systemic Risk Mitigation Act, which aims to prevent deregulation of the financial sector from putting the entire economy at risk, especially during the health and economic crisis caused by COVID-19.
The bill would automatically designate shadow banks above a certain size as “systemically important,” subjecting them to strong capital and liquidity rules, annual stress tests, living wills requirements, and other crucial safeguards. It would also create a Climate and Risk Subcommittee of the Financial Stability Oversight Council (FSOC) to assess the risk posed by climate factors to the stability of the U.S. financial system.
Members of the BlackRock’s Big Problem campaign said:
“As we recover from the devastating impacts of the COVID-19 pandemic, it's critical that we protect our communities and our economy from future shocks to the system driven by climate change,” said Sierra Club campaign representative Ben Cushing. “That means we must strengthen the resilience of the financial system by increasing oversight of large financial institutions from the financial risks of climate change, as well as the risks they create with their investments in the drivers of climate change.”
“BlackRock is the perfect example of the shadow banks that need additional oversight and regulation. It is the world’s largest asset manager, and in just the last few weeks has further consolidated its power and reach by contracting with both the U.S. government and the E.U. to oversee major financial programs. It is absurd for BlackRock to have that much financial power and leverage without the designation and oversight of being deemed systemically important,” said Pete Sikora, Climate Campaigns Director, New York Communities for Change (NYCC)
Background
During the last financial crisis BlackRock stepped in to support the Fed’s bailout; a role that many critics argued gave BlackRock too cozy of a relationship with Washington. In the years following the financial crisis, BlackRock grew its lobby efforts and famously avoided stronger regulatory oversight and designation. The company has ballooned since 2008.
As of January, BlackRock managed more than $7 trillion. In its role managing the Fed corporate debt program, BlackRock will now manage another $750B on behalf of US taxpayers.
About the Sierra Club
The Sierra Club is America’s largest and most influential grassroots environmental organization, with more than 3.5 million members and supporters. In addition to protecting every person's right to get outdoors and access the healing power of nature, the Sierra Club works to promote clean energy, safeguard the health of our communities, protect wildlife, and preserve our remaining wild places through grassroots activism, public education, lobbying, and legal action. For more information, visit www.sierraclub.org.