The Federal Reserve concluded that weather disasters are “not very” bad for financial institutions despite the Biden administration’s warnings that climate change is an “emerging” threat to banks.
“We find that weather disasters over the last quarter century had insignificant or small effects on U.S. banks’ performance,” the report, published in November by the Federal Reserve Bank of New York, stated. “This stability seems endogenous rather than a mere reflection of federal aid.”
The report added that extreme climate events “actually boosts profits” for larger banks because of increased loan demand. In addition, smaller banks are adept at avoiding mortgage lending in flood prone areas using local knowledge of the region they are based.
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