federal reserve governor lael brainard denied thursday that the ultimate goal of the central bank’s focus on climate change risks for banks will end with rules barring banks from lending to the energy sector “we would not tell banks which sectors to lend to and which sectors to not lend to” brainard said during a senate banking committee hearing on her nomination to be the no2 official at the fed sen pat toomey a republican from pennsylvania and the ranking minority member of the senate panel is strongly opposed to the fed’s new focus on climate change he said the fed’s “dalliance” with the issue will undermine the fed’s credibility the fed’s climate change initiative “is all about a precursor for using the regulatory power of the fed to direct capital away from politically disfavored industries” toomey said later in the hearing sen john kennedy a republican of louisiana asked brainard if the fed would ban bank lending to gun manufacturers “that’s not our job we don’t tell banks which sectors to lend to” brainard said brainard who has spearheaded the fed’s work answered that the central bank was actually trying to make sure that banks had “good risk management” for assessing all their material risks the fed is contemplating having banks complete “climate scenario analysis” to identify risks this is not the same as the “stress tests” the fed conducts to make sure banks have adequate capital to withstand a severe recession experts think that the senate will ultimately confirm brainard to a fouryear term as fed vice chairman brainard who has been a strong advocate for keeping interest rates low so that the labor market can recover from the pandemic said that inflation was “too high” and fed policy would be focused on bringing inflation down to the 2 target asked what the fed got wrong when it forecast inflation would be transitory brainard responded “nobody got the pandemic right” agreeing with fed chairman jerome powell who testified on tuesday brainard said the fed can tighten monetary policy without damaging the labor market “i think we are taking actions in the monetary policy front that i have confidence will be bringing inflation down while continuing to allow the labor market to return to full strength over time” she said stocks were mixed in early trading on thursday with the dow jones industrial average djia up over 100 points the yield of the 10year treasury note tmubmusd10y was lower in morning trading