(NewsGlobal.com)- The Biden administration has been pushing climate change mitigation measures, but not all of them are going to have a positive effect on society in general.
One such example is mandating businesses in the financial sector to adopt green policies. But, those policies — if implemented — would end up resulting in businesses and households seeing the cost of borrowing increase substantially, while at the same time slowing the growth of the economy in the U.S.
This could be especially damaging at a time when inflation is rising and the Federal Reserve has plans to increase interest rates potentially three times this year.
Many people, including Bryan Bashur — who wrote an opinion piece for media company The Hill recently — believe that the Biden administration should do all it can to avoid starting any new policy that would increase private lending costs.
As he wrote:
“Increasing the cost of private financing could lead to future economic recession. Groups advocating to impose more stringent supervisory requirements on banks to account for green factors fail to take into consideration the significant increase in lending costs that come with it.”
Surprisingly, it’s something that the White House actually understands. In recent weeks, the Biden administration said some actions that seek to “address climate-related financial risks could impact financially vulnerable communities in the form of higher insurance and credit costs, or the inability to obtain insurance or credit.”
The problem with this is that the people who are likely to be most affected by these changes are the ones who will need to access that credit and capital the most.
In addition, as Bashur writes, the Biden administration is assuming here that financial institutions aren’t already taking some of these measures into consideration on their own. Instead, it seems like another federal government overreach that could have widespread financial repercussions on many families who are already feeling a significant crunch due to the ultra-liberal policies of this White House.
Bashur further explained this when he wrote:
“Financial products are already incorporating green factors into contract agreements. One study shows that the municipal bond market already accounts for green factors, without the need for the government to require banks and their counterparties to take it into consideration …
“Requiring banks to comply with additional disclosures and stricter capital requirements specifically to account for green factors is redundant, risks limiting the amount of financing businesses can receive and increases their costs of borrowing.”
The Biden administration apparently doesn’t see this, though, and instead is plowing forward with more green measures that are sure to hurt access to credit.
Sarah Bloom Raskin is Biden’s new nominee for the position of vice chair for supervision of the Federal Reserve’s board. If she were to be confirmed for that position, she’s likely to require banks to undergo stress testing that’s more strenuous than currently exists, while also altering their requirements for capital to account more for green factors.
If this ends up happening, Americans can expect that affordable credit will not be easy to obtain in the U.S.