{"id":459923,"date":"2021-04-27T13:59:01","date_gmt":"2021-04-27T17:59:01","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=459923"},"modified":"2021-04-27T14:17:20","modified_gmt":"2021-04-27T18:17:20","slug":"banks-trillions-in-climate-financing-pledges-are-a-bailout-hazard-experts-warn","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/banks-trillions-in-climate-financing-pledges-are-a-bailout-hazard-experts-warn\/","title":{"rendered":"Banks\u2019 Trillions in Climate Financing Pledges Are a Bailout Hazard, Experts Warn"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">24<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fbanks-trillions-in-climate-financing-pledges-are-a-bailout-hazard-experts-warn%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=459923&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p><em>News Analysis<\/em><\/p>\n<p>Trillions in financing pledged by banks to <a href=\"https:\/\/www.theepochtimes.com\/t-climate\">climate<\/a> change projects present an unprecedented gamble that could end up in potentially the largest government <a href=\"https:\/\/www.theepochtimes.com\/t-bailout\">bailout<\/a> ever seen, warned several experts on environmental policy and investment.<\/p>\n<p>Many of the world\u2019s largest banks have recently made pledges to direct trillions in investments to projects meant to fight climate change and achieve \u201csustainable development.\u201d<\/p>\n<p>Bank of America pledged $445 billion by 2030; Goldman Sachs and Morgan Stanley each promised $750 billion by 2030; CitiGroup promised $1 trillion by 2030; and JPMorgan Chase committed to $2.5 trillion in 10 years. Dozens of other large banks have joined the UN-backed Net-Zero Banking Alliance, promising not only to slash carbon emissions from their own operations, but also push their clients to do the same.<\/p>\n<p>It would be one thing if the financial institutions were talking about their own money. But that\u2019s not the case. Most of the money is supposed to come from investors, large or small, whose cash the banks direct to companies that fit the climate bill.<\/p>\n<p>A review of the commitments also reveal the companies appear to operate with a broad definition of fighting climate change. It would apparently include undertakings such as wind and solar manufacturing, more energy efficient buildings, and research into \u201cclean\u201d energy sources. But it also includes other causes such as affordable housing development, gender equality, and racial diversity.<\/p>\n<p>All these endeavors would get access to investment dollars that wouldn\u2019t be available to others. Those unwilling to get on the agenda shall be discriminated against, including through \u201cexclusion policies\u201d and \u201cdivestment,\u201d according to the\u00a0Net-Zero Banking Alliance <a href=\"https:\/\/7f0f76c0.sibforms.com\/serve\/MUIEAAZdvrZ_D_V0MF4mWsjly_cLGGi2Mt1m8itEu7CUJQ1fDFCylNHQV8wvJD3xotQCC8JGpK_NlQVNlg16lkroK2YuPry-bz_kfZw6PA-_RrrFiXVSQLLsUYXzzynDf0Rmt0huf69yiWPdy_v7TXdKpRQqJFv_SmDcDO8kFaBFMxFInTJ4MCo06w5ql0zqoX9K6_XXnbxbgmKD\" target=\"_blank\" rel=\"noopener\">guidelines<\/a>.<\/p>\n<p>The banks are portraying the initiatives as motivated by a stroke of conscience regarding the effects of climate change. Many scientists predict that unless carbon emissions are drastically cut, the planet will see more severe natural disasters, such as flooding and droughts. Other scientists question such catastrophic climate predictions, which hold a <a href=\"https:\/\/www.theepochtimes.com\/dozens-of-failed-climate-predictions-stretch-80-years-back_3096733.html\" target=\"_blank\" rel=\"noopener\">poor track record<\/a> of coming true.<\/p>\n<p>But it\u2019s not just the goodness of corporate hearts prompting the pledges, several experts told The Epoch Times. Banks are acting with the understanding the climate projects will be backed by governments.<\/p>\n<p>The Biden administration is reportedly considering a $3 trillion spending bill that places emphasis on broadly defined climate projects.<\/p>\n<p>\u201cIt just seems like the politically salient thing to do for the banks,\u201d said Nicolas Loris, environmental policy economist at the conservative Heritage Foundation.<\/p>\n<p>Playing along with the Biden plan allows the banks to \u201cpotentially be protected and also reap some of the opportunities to have taxpayers offset some of the risk,\u201d he said.<\/p>\n<p>George Santos, a veteran investment banker who previously worked at Citi Bank and Goldman Sachs, was more blunt.<\/p>\n<p>\u201cThey are the No. 1 benefactors. It\u2019s not the environment. All this climate stuff is perpetuated and pushed forward by multi-billion dollar corporations who make billions of dollars on the backs of these so-called programs,\u201d he said with a warning that \u201cif this goes wrong, there\u2019s only one solution for it, which is a federal government bailout.\u201d<\/p>\n<p>Loris acknowledged this is indeed a risk.<\/p>\n<p>\u201cThe amount of money we\u2019re talking even just moving forward, especially in the form of the government subsidizing certain investment decisions, certainly extends the risk to the taxpayer in magnitudes we haven\u2019t really seen before,\u201d he said.<\/p>\n<p>President Joe Biden recently made comments that seemed to lay the groundwork for that eventuality.<\/p>\n<p>\u201cThe private sector can\u2019t meet these challenges alone,\u201d he said at his recent virtual Climate Summit. \u201cGovernments need to step up and they need to lead. We have a role to play in making sure that material climate risks to financial systems are measured, disclosed, and mitigated. If Wall Street is pumping billions of dollars into businesses, it could be turned upside down when the next storm comes. And we know there will be more storms.\u201d<\/p>\n<p>\u201cWall Street made clear the risk it\u2019s taking on. The dollars being invested are often the hard-earned savings of our workers, pensions. We can\u2019t take steps to protect our workers if we don\u2019t step up. We have to be able to move forward from a downside deal then into the upside and strengthen the resilience of our financial system.\u201d<\/p>\n<p>Biden\u2019s climate envoy, John Kerry, underscored the leviathan size of the undertaking.<\/p>\n<p>\u201cIt will require mobilizing finance at an absolutely unprecedented level,\u201d he said at the summit. \u201cAnd it will require governments to help facilitate the net zero transition around the world.<\/p>\n<p>Government\u2019s involvement in the <a href=\"https:\/\/www.theepochtimes.com\/t-economy\">economy<\/a> to such an extent constitutes a power grab, the experts said.<\/p>\n<p>\u201cOnce the government starts getting involved in these types of activities it\u2019s certainly hard to pull out,\u201d Loris said.<\/p>\n<p>As famed economist Friedrich Hayek warned in his 1943 book \u201cThe Road to Serfdom,\u201d government control of the economy, however well intentioned, inevitably leads to political tyranny.<\/p>\n<p>\u201cIt\u2019s a domino effect that will result in the end of the free market, it will be a government controlled market by the end of 2040 if it keeps down this path,\u201d Santos said.<\/p>\n<p>But even though the government may stay to regulate and commandeer, it may not necessarily continue to sufficiently fund.<\/p>\n<p>Biden is now lubricating his spending package with language of economic stimulus to counter the COVID-19 pandemic\u2014even though infrastructure spending <a href=\"https:\/\/www.theepochtimes.com\/democrats-infrastructure-proposal-unfocused-possibly-superfluous-expert_3746527.html\" target=\"_blank\" rel=\"noopener\">does virtually nothing<\/a> to boost the economy in the short term. But next time there may not be such an opportunity and the banks and other companies buying into the initiative would be wise to consider it, according to Santos.<\/p>\n<p>\u201cThey\u2019re playing politics and they\u2019re trying to appease the current administration and the White House. But they\u2019re forgetting one thing: If the next administration comes in or the next two administrations come in and don\u2019t support this agenda of theirs and choose not to bail them out, at the end of the day, the investors and the principals within these institutions are the ones that are going to be hurting the most,\u201d he said.<\/p>\n<p>He anticipates $3 trillion to $4 trillion will last about four years.<\/p>\n<p>\u201cIt will last until the end of [Biden\u2019s] turn,\u201d he said. \u201cIf it\u2019s well managed.\u201d<\/p>\n<h2>Scenario<\/h2>\n<p>If Santos\u2019s warning comes true, it could go roughly like this:<\/p>\n<p>A solar panel manufacturer applies for a government contract made available through the Biden administration\u2019s \u201cinfrastructure\u201d initiative. The manufacturer invests substantial sums into all the paperwork required by the contract bidding process, including environmental assessments and a plethora of \u201csustainability,\u201d \u201cracial justice and equity,\u201d and other requirements. He hires compliance officers and consultants to ensure the papers are in order and the proposal has a greater chance of being accepted.<\/p>\n<p>A year or two later, the contract is granted, requiring the manufacturer to decline private clients and greatly expand capacity to be able to fulfil it. The expansion of the manufacturing plant, the hiring process, the workplace rules, the supply chain all have to comply with federal regulations and the specific rules of the contract, making them substantially more onerous and expensive. More compliance officers and consultants are hired. A major part of the management process is consumed by compliance with regulations.<\/p>\n<p>The government pays more than private clients, but nowhere near enough to cover the expansion. The manufacturer goes to a bank to get one of the climate financing deals. The bank agrees to provide a preferential \u201cgreen\u201d loan and include the firm into its \u201cgreen investment\u201d portfolio, which will provide a massive cash infusion contingent on the firm\u2019s compliance with carbon footprint reduction targets, \u201cracial justice and equity,\u201d and other requirements. Cue in compliance officers and consultants.<\/p>\n<p>The company is suddenly awash with cash. It\u2019s new \u201ccarbon neutral\u201d production plant is a marvel of the world. It buys pricey electric cars and rents posh \u201ccarbon neutral\u201d offices. Its workers join a large national union and negotiate generous healthcare and pension packages. Executives award themselves \u201cmarket rate\u201d bonuses.<\/p>\n<p>A few years later, the manufacturer fulfills the contract. A huge solar farm is opened and all the politicians, bankers, union leaders, and business executives congratulate each other. By this time, Biden\u2019s administration is over and all the money from his initiatives are spent. Government contracts are fewer and private clients aren\u2019t willing to pay the same prices. Moreover, the plant is quickly getting obsolete. The company tries to cut costs and diversify into other industry sectors, but is informed that doing so would run the risk of breaking the bank requirements for its \u201csustainable\u201d designation, triggering severe penalties.<\/p>\n<p>It\u2019s not just this one company. Many companies are in similar situations. The banks are trying to keep the loans viable at least on paper as writing them off would hurt their balance sheets. They allow the companies to repeatedly roll over the loans, kicking the can down the road. Eventually, the banks break the bad news: Unless \u201csomething\u201d is done, a catastrophic cascade of bankruptcies will happen, with hundreds of thousands losing their jobs, small investors losing their life savings, and the entire economy being severely affected. Congress concedes the \u201chuman cost\u201d would be too high and devises a \u201crescue package.\u201d The taxpayer is left holding the bag.<\/p>\n<p>This would still be an optimistic scenario that presumes no corruption, no cheating, and no major economic downturn along the way.<\/p>\n<h2>Jobs<\/h2>\n<p>Biden framed his policy as good both for the economy and the environment.<\/p>\n<p>\u201cThose who do take action and make bold investments in their people and in a clean energy future will win the good jobs of tomorrow and make their economies more resilient and more competitive,\u201d he said.<\/p>\n<p>But Loris pointed out that the government spending often crowds out private projects that would have created jobs too, likely more of them than it creates.<\/p>\n<p>Moreover, the climate plans assume aggressive downscaling and elimination of entire industries, particularly oil and gas.<\/p>\n<p>Santos, whose investment firm holds stakes in these ventures, argued that even if they are to be phased out, at least the current workers should be allowed to continue until retirement.<\/p>\n<p>\u201cThere\u2019s generations and at least another 30 years of good work in several of these industries that are going to be killed because of a very radical agenda,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>News Analysis Trillions in financing pledged by banks to climate change projects present an unprecedented gamble that could end up in potentially the largest government bailout ever seen, warned several &#8230;<\/p>\n","protected":false},"author":1,"featured_media":2276835,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-459923","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/459923","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=459923"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/459923\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2276835"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=459923"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=459923"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=459923"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}