DETROIT—This week, Congresswoman Rashida Tlaib (M1-13) sent a letter to Federal Reserve Chair Jerome Powell asking for clarity as to why the nation’s central banking system is financially propping up corporate polluters like Marathon Petroleum while still failing to sufficiently help cities and municipalities grappling with the loss in tax revenue and exorbitant costs forced upon them by the COVID-19 pandemic.
The House Select Committee on the Coronavirus released a report that showed the Fed’s Secondary Market Corporate Credit Facility (SMCCF) portfolio included the bonds of 95 companies that paid out dividends to their shareholders even as every day workers were laid off, including $15 million worth of Marathon Petroleum corporate bonds, which Tlaib says is incongruous with the Fed’s mandate to maximize employment. The SMCCF portfolio also includes bonds of 227 firms that have been accused of illegal conduct, including Marathon, which has violated numerous environmental regulations in Michigan.
“Marathon has been the worst kind of corporate neighbor, violating Michigan state emission limits fifteen separate times since 2013,” Tlaib wrote. “In September 2019, a toxic chemical leak from their plant caused roads to be closed around the refinery, nearby workers to be evacuated, and leading to the hospitalization of two Marathon employees. I heard from constituents concerned about this leak at a Congressional field hearing held in the shadow of the Marathon refinery last year. This is just one of many incidents where Marathon Petroleum has endangered the health and safety of the people of Detroit.”
“It’s not just the risk of environmental disasters leading to monetary penalties from lawsuits — climate change itself is a risk to financial stability of the system and to the value of the investment of capital by the American people. And the impact of companies like Marathon Petroleum create its own set of risks to the stability of my district and the safety of its residents,” the letter continued.
Tlaib went on to ask for answers to a series of questions related to the Fed’s SMCFF’s purchasing the bonds of companies that threaten our public health and safety, including why Marathon Petroleum makes up a whopping 0.19% of the Fed’s Broad Market Index. The Federal Reserve lags behind other central banks and even other U.S. regulators when it comes to factoring in climate risk in its bond purchasing. The New York Department of Financial Services, the only U.S. member of the global Network for Greening the Financial System, is directing banks to start taking climate change risks into their management decisions, and the leadership of the Bank of England and European Central Bank have each made statements about the need for central banks to consider climate change in their decision-making.
The letter is the latest effort by Tlaib to secure cities and municipalities the pandemic relief they need. She previously introduced the Uplifting Our Local Communities Act, which would expand access to CARES Act funding to state and local governments. She also co-led a bicameral letter to Chairman Powell opposing the Fed’s bailout of the oil and gas industry using CARES Act funding.
The full text of Tlaib’s most recent letter to Fed Chair Powell can be found here.