Bank Agencies’ Climate Test Plans Face Uncertainties, Murky Data

Federal bank regulators are facing data gaps, speculation and inexactitude as they gear up for their unprecedented plans to review banks’ preparedness for climate change.

The Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp. are currently devising “scenario analysis” that would measure climate change risks in banks’ operations and loan portfolios.

The Fed’s planned “pilot micro-prudential scenario analysis exercise” for a handful of banks with more than $100 billion in assets will launch next year, the central bank’s new vice chair for supervision, Michael Barr, said in a Sept. 7 speech.

Regulators ...