Overview
Title
Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Board of Governors of the Federal Reserve System relating to Principles for Climate-Related Financial Risk Management for Large Financial Institutions.
ELI5 AI
H. J. RES. 125 is a decision by the government to stop using a set of rules they made about how big banks should deal with money problems caused by climate change. It doesn't say what will happen instead, which means everyone is left wondering what to do next.
Summary AI
H. J. RES. 125 is a joint resolution that seeks to overturn a rule established by the Board of Governors of the Federal Reserve System. The rule in question provides principles for managing financial risks related to climate change for large financial institutions. This resolution, if passed, would nullify the aforementioned rule, meaning it would no longer have any effect. It is currently under consideration by the Committee on Financial Services following its introduction in the House of Representatives.
Published
Keywords AI
Sources
Bill Statistics
Size
Language
Complexity
AnalysisAI
Providing a structured overview of recent legislative developments, the joint resolution H. J. RES. 125 represents Congress's attempt to disapprove of a rule set forth by the Board of Governors of the Federal Reserve. This bill specifically targets the "Principles for Climate-Related Financial Risk Management for Large Financial Institutions," and, if passed, would nullify the rule, ensuring it has no legal force or effect.
Summary of the Bill
The essence of the resolution is straightforward: Congress is leveraging its authority to disapprove a regulatory rule that was formulated by the Federal Reserve. The rule in question outlines guidelines for managing climate-related financial risks by large banks. The disapproval mechanism is part of a broader set of legislative tools that allow Congress to revoke administrative rules, signaling significant contention over the implications and applications of such regulations.
Significant Issues Highlighted
Several critical issues emerge from the analysis of this legislative move:
Lack of Clarity on Alternatives: One of the glaring omissions in the resolution is the absence of any proposed alternative measures. By canceling the Federal Reserve's rule without offering substitute guidance, there is a potential for confusion and regulatory gaps concerning how large financial institutions should handle climate-related risks.
Ambiguity in Implementation: The bill's phrasing, particularly regarding the rejection of the rule, lacks detailed procedural context. This vagueness could create uncertainties about the implementation and ramifications of this legislative decision, both legally and operationally.
Unspecified Reasons for Disapproval: There is no explicit explanation provided within the resolution for why Congress seeks to annul the Federal Reserve's rule. This absence of rationale undermines transparency and may impede accountability and informed debate about the decision's motivations.
Lack of Impact Analysis: The potential consequences of nullifying the rule are not explored within the text. Removing these risk management principles without examining the implications could significantly affect environmental policies and the financial sector's stability.
Impact on the Public and Stakeholders
Broad Public Impact
The broad public may experience indirect effects from this legislative decision. On one hand, removing specific regulatory rules might be seen favorably by those concerned about regulatory overreach. However, without clearly communicated replacement measures, the bill could leave large financial institutions without necessary guidelines to adequately manage climate-related financial risks, which could have downstream effects on economic stability.
Stakeholders' Impact
For large financial institutions, the repeal of the Fed's rule could temporarily loosen regulatory obligations, but it also introduces uncertainty regarding expectations for climate risk management. This uncertainty may complicate compliance efforts and strategic planning.
Environmental advocates and groups focused on sustainability might view this disapproval negatively, as it appears to reduce the emphasis on climate change considerations within financial regulations. It may signify a step back in integrating climate risk into financial practices, which these stakeholders consider essential for long-term economic sustainability.
For regulatory bodies and policymakers, the precedent set by overturning this rule could encourage scrutiny of other standards and principles, potentially leading to further legislative challenges to administrative regulations.
In summarizing, H. J. RES. 125 embodies a legislative pushback against a particular facet of financial regulation, potentially affecting environmental policy adherence and financial stability practices. Whether this move is seen as corrective or regressive largely depends on one's stance regarding regulation and the perceived importance of addressing climate risks within the financial sector. The resolution leaves significant questions unresolved, necessitating careful consideration of the long-term implications for all involved parties.
Issues
The bill disapproves a rule submitted by the Federal Reserve System but does not provide any clarity on what measures or guidance will replace the disapproved rule. This lack of alternative measures could lead to confusion and regulatory gaps in managing climate-related financial risks for large financial institutions. (Section: The text disapproves a rule by the Federal Reserve System without providing clarity on the alternative measures or actions that will replace the disapproved rule.)
The phrase 'Congress disapproves the rule' lacks detailed explanation of the process or legislative context, which could result in ambiguities regarding how this disapproval will be implemented and what legal implications this might have. This could create uncertainties within the financial and regulatory sectors. (Section: The phrase 'Congress disapproves the rule' could be interpreted ambiguously without further legislative context or explanation of the process, leading to uncertainties in implementation.)
The bill fails to specify the reasons for the disapproval of the Federal Reserve's rule, making it difficult for stakeholders and the general public to understand the grounds and rationale behind this legislative decision. This lack of transparency can pose challenges for accountability and trust in legislative processes. (Section: The bill does not specify the reasons for disapproval, which could make it difficult to understand the grounds for this legislative decision.)
There is no analysis or discussion in the bill regarding the potential impacts of nullifying the climate-related financial risk management principles on large financial institutions. This omission could have significant ramifications for both environmental policy and the financial sector, as these institutions may face increased risks without clear guidelines in place. (Section: There is no discussion on the potential impacts of nullifying the rule on 'Principles for Climate-Related Financial Risk Management for Large Financial Institutions', which may have significant implications for financial and environmental policies.)
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
Read Opens in new tab
Summary AI
Congress rejects the rule set by the Federal Reserve that deals with managing climate-related financial risks for large banks, and this rule will no longer have any effect.