Climate Risk Stumps Bank Regulators Updating Anti-Redlining Plan

Randy Benjenk appeared in a Bloomberg Law article about financial regulators updating anti-redlining rules and how they are facing a conundrum about how to increase lending in lower-income neighborhoods prone to climate disasters while also getting banks to better account for climate risks.

According to Randy, “Banks and regulators have long had to balance the risks of environmental damage when doling out loans, and it has always been a tension with CRA lending and investments.” Randy continued, stating, “Banks’ underwriting processes already take into account the physical risks of climate change, such as the potential loss of collateral due to a natural disaster, yet banks have managed to lend in areas vulnerable to these events.”

Randy said, “By and large, regulators and banks have found a way to strike an appropriate balance between those goals, and a sharper focus on risks arising from climate change shouldn’t fundamentally alter that balance.”

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