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Bank Regulators Need Imagination in Climate Risk Exam, Hsu Says (2)

Sept. 7, 2022, 1:31 PMUpdated: Sept. 7, 2022, 9:14 PM

Bank regulators need to develop a new model for measuring banks’ exposures to climate change risks, Acting Comptroller of the Currency Michael Hsu said.

Determining how banks would fare during a climate-generated crisis would require a “diversity of approaches” in examining the industry, Hsu told a gathering of bankers in New York Wednesday. Regulators’ “muscle memory”—built up by more than a decade of stress testing, where banks are measured for how their capital and liquidity measures hold up to a variety of adverse financial conditions—may end up being a problem when measuring climate risk, he said.

How to assess a ...