Public Remarks as Prepared for Delivery
Sandra L. Thompson
Acting Director, Federal Housing Finance Agency
FINANCIAL STABILITY OVERSIGHT COUNCIL
PRINCIPALS MEETING
THURSDAY, OCTOBER 21, 2021
Thank you, Madam Chair. I commend the Council for undertaking this important first step toward addressing the potential effects of climate change on the financial stability of the United States. I want to also acknowledge the thoughtful, constructive work that my FSOC colleagues and member agency staff have put into crafting this report in response to the Executive Order on Climate-related Financial Risks.
The FSOC report on Climate Related Financial Risks provides a comprehensive and thorough review of the member agencies’ current efforts to improve capacity to understand, assess, and address climate-related issues. I support the Council’s recommendation to increase prioritization of these efforts, and I share the Council's view that current challenges on data limitations and incomplete tools cannot justify inaction. To that end, I commit to working collaboratively with other member agencies to implement the recommendations.
FHFA recognizes the serious threat that climate and natural disaster risks may pose to the U.S. mortgage finance system and has been actively working to ensure these risks are accounted for through the supervision and oversight of our regulated entities. We are focused on strengthening our capabilities to identify and assess the current and future exposure of our regulated entities to risks related to climate change.
For years, FHFA’s agency-wide Disaster Response Team has coordinated with its regulated entities, government agencies, and other external stakeholders during natural disasters to support borrowers and renters affected by natural disasters, including the use of forbearance and workout options.
In 2020, FHFA also established its agency-wide Climate and Natural Disaster Working Group to coordinate its many efforts to improve FHFA’s understanding of climate and natural disaster risks and their effects on the regulated entities, the national housing market, and on historically underserved and vulnerable communities.
Earlier this year, FHFA issued a Climate and Natural Disaster Risk Management Request for Input (RFI) [1] and hosted a Public Listening Session [2] on this critical topic. The RFI asked for information on data, FHFA’s supervisory and regulatory responsibilities, financial disclosures, affordability, and fairness and equity.
FHFA recognizes the central role its regulated entities play in the housing finance market. FHFA’s objective is to ensure its regulated entities remain safe and sound while serving their housing finance missions and providing leadership to the housing finance market in addressing both climate-related physical property risks and the transition risks that may accompany the move to a low-carbon economy. FHFA recognizes the need to coordinate and collaborate with other agencies and stakeholders to develop solutions that address and are responsive to the needs of underserved and vulnerable communities.
FHFA will also work to improve public awareness and transparency of climate and natural disaster risks to help ensure that all participants in the housing finance system have access to the information needed to make informed decisions. We will also ensure that our regulated entities know how important it is to consider the effects of climate change in their decision making.
These are important initial steps, but there is still a great deal of work to be done. FHFA stands ready to work with all who share the goal of building a stronger, more climate resilient housing finance system.
Madam Chair and fellow members of the Council, I look forward to continuing to work with you on these and future matters. Thank you.
[1] FHFA, “Climate and Natural Disaster Risk Management Request for Input” (January 2021) at https://www.fhfa.gov/climate-and-natural-disaster-rfi.
[2] A video of the listening session and accompanying materials is at https://www.fhfa.gov/news/videos/climate-and-natural-disaster-risk-management-at-the-regulated-entities.
Contacts:
Adam Russell Adam.Russell@FHFA.gov