On September 10, 2025, U.S. financial regulators made a move that reverberated through both the financial and environmental sectors: they voted to dismantle two high-profile committees dedicated to monitoring the financial risks posed by climate change. This decision, carried out by the Financial Stability Oversight Council (FSOC) and announced in a public session, marks a significant reversal of the Biden administration’s efforts to integrate climate considerations into the nation’s financial regulatory framework.
The FSOC, a multi-agency body responsible for identifying risks to the stability of the U.S. financial system, is currently chaired by Treasury Secretary Scott Bessent. In Wednesday’s meeting, the council rescinded the charters of both the Climate-Related Financial Risk Committee and the Climate-Related Financial Risk Advisory Committee—two groups established during Janet Yellen’s tenure as Treasury Secretary under President Biden. The vote was unanimous, with no dissent or abstentions, signaling a strong consensus among the council’s members.
These committees were initially formed in response to mounting concerns about the economic impacts of increasingly severe storms, wildfires, and other climate-related disasters. According to Reuters, Janet Yellen had repeatedly warned that such events were already causing significant economic and financial disruptions and could, if left unaddressed, trigger destabilizing losses in asset values across the U.S. economy. The committees’ work focused on analyzing how climate disasters might affect sectors like housing and insurance, as well as developing recommendations for regulatory responses.
Treasury Secretary Scott Bessent explained the rationale behind the decision, framing it as part of his “back to basics” approach to financial regulation. "By rescinding these charters, the council can better focus its attention and resources on core financial stability issues and our efforts to promote economic growth and security while maintaining safety and soundness and protecting consumers," Bessent told the meeting, according to Reuters. He argued that removing what he described as burdensome rules—such as those related to capital requirements for banks and other lenders—would help unlock more economic growth.
This move is not occurring in isolation. It is part of a broader rollback of Biden-era climate policies, which have included federal support for clean energy projects and stricter regulations on fossil fuel production. According to Devdiscourse, the current administration’s approach aims to deregulate fossil fuel production while scaling back federal initiatives that promote renewable energy. Bessent’s “back to basics” mantra, therefore, is being interpreted by some as a signal of the administration’s intent to prioritize economic growth, even if it means dialing back on climate risk oversight.
Not everyone is pleased with this policy shift. Critics have been quick to voice concerns that dismantling the climate risk committees could weaken the financial system’s resilience in the face of climate disasters. Tracey Lewis, a senior policy counsel at the non-profit group Public Citizen, was especially blunt in her assessment: "The Trump administration is set to destroy key protections against the risks climate change poses to our economy," she told Reuters. Lewis emphasized that the committees’ work on assessing the financial impacts of climate disasters—particularly on housing, homeowners’ insurance, and broader financial regulation—played an important role in safeguarding the soundness of the American financial system.
These criticisms are not without foundation. As climate-related disasters continue to escalate in frequency and severity, the economic costs have mounted. Hurricanes, wildfires, and floods have led to billions of dollars in insured and uninsured losses, disrupting communities and causing ripple effects throughout the financial sector. Housing markets in disaster-prone areas have grown more volatile, while insurers have struggled to price risk accurately, sometimes pulling out of entire regions. The now-disbanded committees were tasked with understanding these complex interconnections and advising regulators on how to respond.
Proponents of the rollback, however, argue that the prior regulatory approach placed unnecessary burdens on lenders and stifled economic activity. Bessent and others in the administration contend that a lighter regulatory touch will encourage banks to lend more freely, thus fueling investment and job creation. According to Devdiscourse, Bessent sees this as a necessary course correction—a way to "stimulate economic growth" by easing capital requirements and refocusing regulatory energy on traditional financial stability concerns.
Yet, the debate over how best to balance economic growth with climate risk mitigation is far from settled. Some financial experts caution that ignoring climate risks could ultimately undermine the very growth policymakers seek to promote. If unchecked, climate-driven disasters could destabilize financial institutions, erode asset values, and leave taxpayers on the hook for costly bailouts or disaster relief. The committees established under Janet Yellen were, in many ways, an attempt to get ahead of these risks by embedding climate considerations into the regulatory fabric.
The FSOC’s decision also comes at a time when the council is planning to review past guidance on designating non-bank institutions as systemically important financial institutions (SIFIs). Such designations would subject these firms to greater oversight—an issue that has long been contentious in regulatory circles. While this review may signal a willingness to maintain some forms of heightened scrutiny, critics argue that sidelining climate risk analysis sends the wrong message about the council’s priorities.
From a political standpoint, the dismantling of the climate risk committees is emblematic of the broader ideological divide over climate policy in the United States. Supporters of the rollback frame it as a pragmatic adjustment, necessary to unshackle the economy from what they see as overreaching regulations. They point to the need for affordable energy and robust lending as reasons to pare back climate-focused oversight. Opponents, meanwhile, view the move as short-sighted, warning that it leaves the financial system—and by extension, the broader economy—vulnerable to shocks that are only likely to intensify in the coming years.
As the dust settles, both sides agree on at least one point: the stakes are high. The FSOC’s actions will shape how the U.S. financial system prepares for, and responds to, the realities of a changing climate. Whether the "back to basics" approach will deliver the promised economic growth without exposing the system to unforeseen risks remains to be seen. But for now, the committees that once stood as sentinels against climate-driven financial instability have been quietly retired, and the debate over their legacy—and the nation’s regulatory future—continues.