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Pay close attention to Sarah Bloom Raskin’s appearance before the Senate Banking Committee tomorrow, as part of her confirmation process. If Federal Reserve politics aren’t usually your thing, make an exception.

Raskin’s nomination to vice chair for supervision at the Fed could be monumental for climate policy, Kate Aronoff explains in a piece published today. Raskin is a former member of the Federal Reserve Board of Governors. And she’s been open about her belief that the Fed should start factoring climate change into its regulation of America’s financial system:

In The New York Times, Bloom Raskin has criticized no-strings-attached Federal Reserve funds being used to prop up risky, overleveraged fossil fuel companies as part of pandemic bond-buying programs. “The Fed,” she wrote, “is ignoring clear warning signs about the economic repercussions of the impending climate crisis by taking action that will lead to increases in greenhouse gas emissions at a time when, even in the short term, fossil fuels are a terrible investment.” In testimony before the House Select Committee on the Climate Crisis, she said, “Informed decisions allow us to mitigate the financial impact of climate risks and fashion timely remedies ahead of a crisis,” noting the need for financial regulators to “foster the development of climate-related financial risk management technology,” including climate-related financial disclosures and stress tests, like those endorsed by both Jay Powell and the European Central Bank.

Incorporating more realism about climate change into financial regulation could have far-reaching consequences for energy markets—and particularly fossil fuel investment. Naturally, this means that the Chamber of Commerce is going nuts about the nomination. The Chamber’s executive vice president, Tom Quaadman, has already penned a letter to ranking members of both parties suggesting that Raskin is biased against fossil fuels. (This is an emerging narrative on the right: that ending preferential treatment for fossil fuels is somehow discriminatory.)

Tomorrow’s hearing could get heated. And the ramifications could be profound, Kate argues:

The Fed is tasked with ensuring the stability of the financial system as well as full employment, and its policies ripple well beyond U.S. borders, due to the dollar’s status as the world’s reserve currency. Given the estimated $343 billion that climate disasters cost last year, and the 1.1 degrees Celsius of warming of the planet, financial regulators can either consider the threat posed by climate change and the fossil fuel industry’s stranded assets or ignore them and see what happens—as several senators are likely to argue on Thursday. The main threat the right has identified, then, is that Sarah Bloom Raskin might actually do her job.

Check out Kate’s full piece. You can watch the hearing, beginning at 8:45 a.m. tomorrow, here.

—Heather Souvaine Horn, deputy editor

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