By John Ubaldi, “Ubaldi Reports”

For the past four years Democrats have accused President Trump of politicizing the Federal Reserve.  Now that Joe Biden is prepared to assume the presidency, Senate Democrats are eager to unleash their progressive agenda onto the U.S. financial markets.

In August, Senate Democrats’ Special Committee on the Climate Crisis issued a report detailing how the Federal Reserve and eight other federal regulatory agencies should as a matter of public policy penalize investment in fossil fuels and begin the transition to green energy.

What Senate Democrats are advocating in the report is that climate change poses significant risks to the financial system and our nation’s economy. The financial industry and the regulators responsible for overseeing it must start taking these risks seriously to avoid a future financial shock. U.S. regulators do not currently require financial institutions to include climate change in their risk management practices. They have dismissed climate risks as too far in the future, too uncertain, and too hard to model. As a result, they are allowing financial companies to increase systemic risk by imprudently financing the activities that accelerate climate change.

Democrats want all eight federal financial regulatory agencies to force financial institutions to factor in these risks which would essentially punish the fossil fuel and energy sector in favor of the renewable energy industry.

What is being asked of the eight federal financial regulatory agencies is extremely vague and open up to extreme interpretation depending on one’s political ideology. President-elect Biden has never been pressed or asked any of these questions during the campaign, but as he assembles his cabinet he has selected individuals who actively support the “New Green Deal” and climate change ideology.

The change that Democrats are advocating is to have the Federal Reserve use capital and liquidity standards coupled with annual stress tests to make banks—which also can include insurers and asset managers—price in these unknowable political risks.  Democrats would have federal regulators assign carbon-intensive assets to much higher risks, forcing financial institutions to assign much higher risks to them.

This would discourage financial institutions from financing such investments, at the same time renewable energy companies would be deemed lower risk, thus obtaining easy line of financing.

This policy that Democrats want to pursue once Biden is president, replicates a tool that the Obama-Biden administration instituted by utilizing the financial sector as a legal instrument in targeting solvent businesses. This program, by the Obama-Biden administration, was called Operation Choke Point – to deny businesses they deemed undesirable access to capital in the financial service sector.

During the Obama-Biden administration the Federal Deposit Insurance Corp. labeled certain businesses as “high risk,” with unelected regulators targeting firearms and ammunition dealers, check-cashers, payday lenders, fireworks vendors and any other businesses they deemed undesirable.

This has now being extended to the U.S. energy sector.

What Democrats are advocating has serious constitutional implications as unelected regulators without congressional authority or anything emanating from the courts can circumvent the legislative process.  These unelected regulators can decide on their own what business they deem undesirable, making it “unacceptable” for a financial institution to provide financial capital to a legitimate business.

Democrats realize what they couldn’t accomplish through legislation or through the electoral process have begun to manipulate the regulatory process for partisan purposes in their efforts to eliminate fossil fuels. Throughout the presidential election, Biden consistently stated he would not ban fracking, but the media never asked or cared to ask about this severe contradiction in what he stated openly and what his true intentions really are.

This has now placed enormous pressure on the financial sector to curtail financing to America’s domestic energy industry.  The new stealth strategy albeit aided by a complicit media who are guilty of journalistic malpractice in failing to do even the most rudimentary research would have uncovered this new version of Operation Choke Point.

This is a way for Democrats to duplicity claim they are not eliminating the fossil fuel industry but by stealth they are systematically destroying the U.S. energy industry and other undesirable businesses they despise.

The big losers will be the millions of American energy sector jobs, those in the minority and low-income communities they claim to want to help.  America’s energy independence will be sacrificed with the winners being Russia, China and Iran.

Democrats are hell bent that those companies with high emissions be downgraded and forced to pay more for needed capital.  This policy push, by Democrats, is to have the Securities and Exchange Commission factor climate risks into its fiduciary standard for asset managers.

This new policy by Democrats would force pensions and 401(k) mangers to invest middle class retirement fused on climate policy no matter if any legislation had passed Congress.

A Wall Street Journal Editorial summed up the Democratic goal to deny capital to companies that produce fossil fuels or hold other assets that politicians deem “toxic.” Democrats explicitly say that “utilities, automobiles, aviation, shipping, real estate, and heavy industry” could also become stranded assets. Banks would suddenly have to account for the risk that home and commercial mortgages in shale basins would fall underwater if fracking is banned. Airlines might get downgraded because the Green New Deal contemplates limiting air travel.

The report says “the Fed must account for [climate] risks in monetary policy: its work to buffer the economy from unexpected shocks and achieve maximum employment and price stability.” Democrats aren’t clear on this, but they could presumably duplicate the European central Bank by buying corporate and government bonds for use in financing renewable energy projects.

In the past the Federal Reserve has been wrong on inflation, unemployment, and bankers are notorious for overlooking risks to the financial system; does anyone remember the housing crisis of 2008-09?

Last year J.P. Morgan announced that it will spend $750 billion over ten years on sustainable finance projects, restrict financing to all new oil production and exploration in the Arctic, and impose stricter lending requirements for coal companies. In a letter to investors earlier this year, Blackrock—the world’s largest asset manager— CEO Larry Fink said the company will make “sustainability integral to portfolio construction and risk management,” exit “investments that present a high sustainability-related risk, such as thermal coal producers,” launch “new investment products that screen fossil fuels,” and strengthen “our commitment to sustainability and transparency in our investment stewardship activities.”

A special committee convened by the Commodity Futures Trading Commission, which issued a report that endorsed much of the Senate Democrats’ plan including climate-change stress tests. The committee, which was organized by Democratic Commissioner Rostin Behnam, included members from CalPERS, Bloomberg NEF, several investment firms and asset managers.

Many financial firms stand to make a lot of money from this massive regulatory change including billionaire Michael Bloomberg. Bloomberg wrote an op-ed urging the incoming Biden Administration to adopt the guidelines of the “Task Force on Climate-related Financial Disclosures,” which he coincidental chairs.

Bloomberg and Blackrock and other financial heavy weights may do really well from the changes to climate policy, but how will middle class Americans do? Remember these are the same individuals who regularly engage with China at the expense of millions of American workers.