Rainforest Action Network
Editor's Note: This guest post on the link between the banking industry and coal was written by Rebecca Tarbotton and Dana Clark at Rainforest Action Network
In the past few weeks, our economic system has sustained some of the most dramatic shifts of the past 50 years. Comparisons have been made to the Asian economic crisis of the nineties, the dot-com bust of the early 21st century, and even the Great Depression. Our economic and financial system is in tatters, and all of us are wondering what will come of our savings, our homes, and our future.
With the unprecedented nationalization of Freddie Mac and Fannie Mae, Lehman Brothers going through the largest bankruptcy filing in U.S. history, and Goldman Sachs and Morgan Stanley voluntarily becoming bank holdings companies, the actions taken by the Federal Reserve are themselves an admission that the institutions that make up the U.S. financial system are broken.
It is critical that we look beyond the bailout to the underlying cracks this crisis has exposed in our financial system, the decades of risky financial behavior that is now mortgaging our homes and our climate.
With the recent bank consolidations and failures, we are left with three dominant banks in the U.S., "the Big 3"- Bank of America, Citi, and JPMorgan Chase. At present, these banks are the lead backers of the coal industry, as well as oil and gas, at a time when greenhouse gas emissions are escalating and the economic, public health and environmental consequences of climate change are becoming all too clear.
For the past eight years, Rainforest Action Network has been pushing all of these banks to develop robust and meaningful climate policies that take accountability for the role their financing is playing in the growth of global carbon emissions. We have been urging these banks to shift their resources away from climate-destructive industries and towards support for the development and deployment of clean, renewable energy sources including solar, wind, and energy efficiency. Our demand is even more relevant today when our troubled economy needs investments in real, tangible infrastructure that leads us to a secure energy future.
Banks need to be held accountable for the impacts of their investments, whether they are subprime mortgages or new coal plants. In both cases, the impact of the financing deal is ‘externalized' - that is, the effect on people and the environment is not considered when the loan or transaction is being approved. In the case of subprime mortgages, home foreclosures were not considered a ‘downside' until they started happening at a rate that impacted the viability of the financial system itself. The same reasoning holds true in the financing of fossil fuel projects. The impacts of constructing coal-fired power plants on the climate and on communities have not been deemed key factors in determining whether or not to finance such projects.
There has never been a better time to hold banks accountable for the impacts of their investments and demand that they develop the necessary due diligence processes to ensure that we do not mortgage the Earth's natural capital in the same way that we have mortgaged the futures of millions of Americans whose homes have been foreclosed on.
It is crucial to take this opportunity to shift the debate from one that dwells on the immediate need to staunch the bleeding from the subprime meltdown to one that is based on a vision for a socially just and ecologically sustainable financial system.
With this crisis comes an unprecedented opportunity to rebuild our economy and establish a financial system that operates within ecological limits. It's time for Americans to demand structural solutions that put families before financiers and the planet before profits.
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