A group of nine senators, led by Alaska U.S. Sen. Dan Sullivan penned a letter to Federal Reserve Chair Jerome Powell, expressing concerns over the Fed’s involvement in climate activism and calling for a return to addressing pressing economic issues affecting the American people.
The senators cautioned against the Fed’s deviation from its statutory authority and emphasized the need for a focus on matters such as record inflation and the recent regional banking collapse that has shaken confidence in the banking system.
Sullivan underscored the consequences that arise when federal regulators prioritize activist-driven environmental, social, and governance (ESG) principles over their mandated responsibilities.
He criticized the infiltration of far-left environmental activism in various government offices and agencies, including the Securities & Exchange Commission, the Defense Department, and the Federal Reserve, under the Biden administration, and pledged to hold federal officials accountable and ensure compliance with the law.
The senators highlighted that Chairman Powell himself acknowledged during his confirmation process that the Fed is not a “climate policymaker.”
But under Powell’s leadership, the Fed has begun implementing ESG principles into the risk analysis required of banks, using what is increasingly known as a “climate-stress test.”
Describing this as policy disguised as risk analysis, the letter contended that the Fed’s signaling implies that activities by banks not aligned with net-zero goals by 2050 are inherently risky and unfavorable.
The senators argued that this approach diverts capital away from traditional energy development at a critical time for the nation’s economic and national security, while inadvertently empowering America’s adversaries. They attributed the climate stress test as the logical outcome of the Fed’s growing track record of climate activism.
“We are growing increasingly frustrated with the Federal Reserve’s … engagement on environmental policymaking and research far outside of its statutory mandate, all while there is persistent inflation and a crisis of confidence in the banking sector,” the senators, wrote in the May 17 letter.
The senators emphasized the urgency of addressing issues well within the Fed’s statutory authority, citing recent failures in inflationary policy and oversight that contributed to the regional banking collapse. They stressed the importance of preserving the central bank’s independence as a safeguard against partisan interests and warned that the Fed’s persistent entry into the political arena, particularly on climate change, has undermined its legitimacy.
“We urge you to rein in the Fed’s regional banks and its economists who are seemingly ignoring your leadership. The Fed’s credibility hangs in the balance, and without a course correction, history will find you either complicit or ineffective as Chairman,” Sullivan wrote.
Joining Sullivan in signing the letter were Senators Mike Crapo (R-Idaho), Kevin Cramer (R-ND), Joni Ernst (R-Iowa), Mike Braun (R-IN), Roger Marshall (R-KS), Ted Budd (R-NC), Mike Lee (R-IN), and James Risch (R-Idaho). Their collective efforts reflect a commitment to holding federal officials accountable and maintaining the integrity of the central bank.
During Powell’s confirmation in 2022, Sen. Sullivan voted against him because the Biden Administration was forcing climate change mission-creep into the Fed, and Powell had done little to stop it.
“The Federal Reserve has a dual mandate from Congress: maintaining price stability while keeping unemployment low. During Chairman Powell’s first term as chair, the Fed has failed dramatically on the first. There are many reasons for this, but one clear cause is the Fed’s decision to take its eye off the ball of these statutory mandates required by Congress,” Sullivan wrote in a statement explaining his vote in 2022.
“The citizens of Alaska who I represent are hurting badly from high inflation. They are also well aware of the federal government’s and federal regulators’ attempts to choke off capital to energy producers in Alaska and other states by shoehorning climate policies into areas that are inconsistent with statutory mandates from Congress. A number of Biden administration finance nominees have been focused on doing this—both those who have been confirmed and rejected by the Senate—including nominees to the Fed, the SEC, the Treasury, and the Office of the Comptroller of the Currency,” he wrote.
