Welcome to our last Promissory Notes issue of 2021. As we all know, 2021 was another interesting year in the banking and finance industry, and we expect 2022 to be much the same. Our goal, as with all of our publications, is to provide you with timely information and insights. We hope Promissory Notes meets that goal -- and perhaps even exceeds it.

Bank Boards Should Press Execs on Climate Risk, OCC Says -

"Acting Comptroller Michael Hsu suggested five lines of questioning bank board members should pursue to keep the pressure on bank executives to follow through on climate change risk."

Why this is important: The five questions follow an earlier statement by the OCC that it would lay out a framework for how large banks might manage climate risk. The questions to bank management are designed to generate discussions within the banks about risks and opportunities arising from climate change. Although the Acting Comptroller admits a carbon tax is not likely in the near future, he suggests that considering such a tax is useful for banks in identifying their most significant exposures and greatest concentrations of risk. One line of inquiry proposed by Hsu is to identify which borrowers are most likely to have trouble repaying or see their collateral values decrease, either as a result of physical risk or transition away from fossil fuels. For some fallout from this sort of regulatory push, see the article below regarding "woke capitalism."