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U.S. Financial Regulators, Aided by Whistleblowers, Can Mitigate the Financial Risks of Climate Change Under Existing Law

By: Karen E. Torrent Policy Counsel, National Whistleblower Center

Prior to the global financial crisis of 2008, alarm bells rang out warning of the impending burst of the mortgage bubble. No action was taken to avert this crisis, and as a result, the U.S. lost $648 billion in economic growth, $3.4 trillion in real estate values, $7.4 trillion in stock devaluations and 5.5 million Americans jobs in a little over a year.

Alarm bells are ringing once again, this time signaling the threat of an even larger multi-trillion-dollar climate change carbon bubble that has the potential to destabilize the economy, strand assets, devalue investments, and cause severe job losses, in addition to threatening the environment and human health. Experts warn that under certain scenarios, the scale of global economic losses from climate change could eclipse the 2008 financial crisis by three or four times.

The good news is that unlike in 2008, U.S. financial regulators have the statutory authority and policy tools to mitigate or prevent climate-related financial risk under existing U.S. law. In addition, the U.S. has a robust oversight and law enforcement framework to ensure compliance.

One of the most effective ways to prevent major financial fraud – and limit the economic damage caused by it – is to expose the fraud in real-time and also assemble an airtight enforcement case. This can be accomplished through the assistance of whistleblowers who can provide relevant information and assistance to federal financial regulators and law enforcement authorities under powerful U.S. laws like the Dodd Frank Act.

Multiple whistleblowers stepped forward to expose the financial fraud associated with the 2008 mortgage bubble crisis. As the U.S. faces the looming threat of another financial crisis, it’s likely that corporate insiders may step forward once again with information that could help mitigate or prevent the damage caused by financial risks related to climate change.

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