FRB Staff Criticizes GSIB Climate Action Plans

A new FRB staff paper assesses GSIB climate-action plans, finding them better but still wanting with regard to risk measurement, disclosure, and management as well as the alignment of financing activities with stated net-zero targets.  The paper largely depends on GSIB disclosures, likely not only leading authors to call for improvements given the well-known early stage of these releases, but also making uncertain its analysis of opaque areas such as internal policy alignment.  The study notes the lack of standardization in GSIB disclosures, efforts, and terminology but does not seem to address it in reaching its conclusions.

FRB-NY Staff Find Banks Target Repurchases to Constrain Capital Distribution

Reaching no conclusions about the wisdom of the Fed’s 2020 restrictions on bank capital distributions, a new blog post from FRB-NY staff finds that changes in repurchases account for almost all of the movement in bank shareholder payout since the pandemic and that the greater volatility of repurchases relative to dividends reflects long held trends.  This is because changes to repurchases are more discretionary than “highly visible” dividend changes.

Daily010923.pdf