The Trump administration was accused Thursday of giving a “parting gift” to fossil fuel companies with a finalized rule that seeks to prevent large financial institutions from refusing to lend to specific sectors in a purported effort to ensure “fair access.”
The Office of the Comptroller of the Currency (OCC) announced the finalized “Fair Access to Financial Services” rule less than two weeks after the public comment period ended. Roughly 35,700 comments were received, 31,290 of which were opposed to the proposal, the OCC said.
The regulation, proposed in late November, covers banks with over $100 billion in assets and directs them to not refuse financial services unless “documented by measurable, empirical, quantifiable data evaluated under the bank’s established, impartial risk-management standards established in advance by the bankand.” The rule, Bloomberg reported,
is partly a response to 2018 announcements from firms, including Citigroup and Bank of America Corp., that they would stop doing business with some firearms makers—decisions that angered conservatives. Other lenders decided not to finance oil and gas companies that drill in the Arctic, prompting outrage from Alaska’s two Republican senators.
OCC’s notice on the Federal Register also acknowledges (pdf) that banks are “often responding to pressure from advocates.”
NPR recently spoke with John Court, head of regulatory affairs at the Bank Policy Institute, who explained that many financial firms are becoming more focused on environmental, social, and governance—so-called “ESG” issues.
“Among those are racial equality, climate, other issues,” Court said. “And this proposal clearly would undercut the ability of a banking organization to achieve or administer any so-called ESG goals that it might have.”
Yevgeny Shrago, policy counsel for advocacy group Public Citizen’s Climate Program, pushed back against OCC’s assertion it took stakeholder comments into consideration, calling the narrow window for the rule’s finalization “audacious in its violation of law and good government norms, even by the abysmally low standards in the Trump administration.”
Given that 35,000 comments were received, and assuming an 8-hour federal workday, this means that the OCC reviewed ~398 comments per hour before finalizing its rule. For an analysis of similar probabilities, see: https://t.co/QbHzafthTy https://t.co/pHfi0hV4Pv
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— Bank Policy Institute (@bankpolicy) January 14, 2021
“The grave procedural issues are only compounded by serious substantive issues Public Citizen highlighted,” Shrago continued. “This rule is nothing more than a parting gift from the Trump administration to fossil fuel companies and a few other favored industries. We call on the Biden administration to pursue all available courses of action to ensure that this rule never takes effect.”
Friends of the Earth program manager Lukas Ross was similarly critical of the regulation and called it “a disgrace” that the incoming Biden administration should swiftly work to undo.
“With a new majority in the Senate, we fully expect Democrats to give this rule the treatment it deserves under the Congressional Review Act,” said Ross. “Trump’s parting gift to Big Oil cannot be allowed to stand.”
Critics of the proposal also included the House Financial Services Committee.
In a letter sent last month to acting Comptroller of the Currency Brian Brooks, committee members urged OCC to withdraw the proposal. This “rulemaking appears designed to force banks to ignore material risks posed by fossil energy companies, gun manufacturers, and other large corporations while providing them access to any banking product or service they want,” they wrote.
The “misguided” plan, the lawmakers further warned, will “increase systemic risks to the financial system, discourage corporate social responsibility, and do nothing to ensure communities of color are better served by the banking system.”