Fed's Waller says climate change does not deserve special financial treatment

May 11 (UPI) -- U.S. Federal Reserve Gov. Christopher Waller on Thursday acknowledged the existence of climate change but said it does not warrant special consideration when assessing financial risks.

"Climate change is real, but I do not believe it poses a serious risk to the safety and soundness of large banks or the financial stability of the United States," he said in his prepared remarks to an audience at Spain's central bank in Madrid.

Waller noted, meanwhile, that the case could be made that the Fed is giving climate change "special treatment" due to the creation of a Financial Stability Committee, for example, but that was simply not the case.

Physical risks such as forest fires or hurricanes are certainly cause for financial concern in the area they impact but not on a major economic scale, he said.

"These events, of course, are devastating to local communities," he said. "But they are not material enough to pose an outsized risk to the overall U.S. economy."

A 2022 report from The Brookings Institution that followed a vote at the Securities and Exchange Commission to require public companies to reveal any risks from climate change suggested, however, that the risks are real.

Analysts at Brookings said that more than 40 weather-related disasters from 2020-2022 inflicted well over $1 billion in damage.

Waller's comments, meanwhile, are in contrast to a position taken by the Federal Reserve Bank in San Fransisco, which said in 2021 that climate change "will result in economic and financial losses for many businesses, households, and governments" that require attention.

Nevertheless, Waller said that risks are risks and it is unreasonable to give undue attention to any single factor.

"My job is to make sure that the financial system is resilient to a range of risks," he said. "And I believe risks posed by climate change are not sufficiently unique or material to merit special treatment relative to others."

His remarks followed last week's rate hike of 25 basis points from the Federal Reserve. When announcing the hike, Fed Chair Jerome Powell focused largely on concerns in the U.S. banking sector given the recent failures from the likes of California's Silicon Valley Bank.

Elsewhere, Powell said the Fed has a dual mandate to keep employment levels healthy while at the same time creating stable prices for consumers. Recent data on both consumer-level and wholesale prices show some moderation, but a core metric of inflation remains above the 2% target rate set by the Fed.