A major hurricane in the Northeast U.S. could trigger a wave of defaults on loans offered by Wall Street banks, according to a long-awaited analysis by the Federal Reserve that underscores climate change’s growing implications for the U.S. financial system.
That prediction is based on data from the banks themselves.
Last year, the Fed required for the first time that the six largest investment banks in the U.S. test their capacity to model — and withstand — a range of climate change impacts and futures. Among them: extreme hurricanes, fires and floods, as well as a rapid transition away from fossil fuels.
The central bank released the resultsof that exercise Thursday afternoon. The 46-page document summarizes information provided by JPMorgan Chase, Bank of America, Wells Fargo, Goldman Sachs, Morgan Stanley and Citigroup.
