FHFA issues climate risk advisory to FHLBanks

The Federal Housing Finance Agency issued an advisory bulletin that provides guidance to the Federal Home Loan Banks on incorporating climate-related risks into their risk-management frameworks.

Details: The FHFA bulletin says:

  • Climate-related risks may negatively affect the value of housing collateral that supports the FHLBanks’ lending activities.

  • Associated physical risks could disrupt the FHLBanks’ operations and ability to carry out their mission.

  • The FHLBanks should adhere to the agency’s guidance to address the effects of these risks on their business and operational resiliency.

  • Adherence will help ensure the FHLBanks are able to continue serving as an ongoing, reliable source of liquidity and support to their members.

ICBA Policy: ICBA opposes any federal or state climate risk regulation that adversely impacts community banks and their ability to support their communities and customers. In a statement to Congress earlier this year, ICBA said agency efforts on climate risk are an emerging threat to community banks and their customers.