23 Nov 2020
A Wall Street regulator appointed by President Donald Trump wants to force banks to finance unpopular businesses the industry has been known to shun — a list that includes oil companies, gun manufacturers and private prisons.
Acting Comptroller of the Currency Brian Brooks on Friday proposed a rule that would require banks to extend services and credit to any customers that pass their risk assessments. The move addresses a concern raised by Republicans that lenders including Citigroup Inc. and Bank of America Corp. have engaged in discrimination due to public pressure or their own distaste for certain industries.
“There is a creeping politicization of the banking industry that has the propensity to be very, very dangerous,” Brooks told reporters Friday in a call about the rule, which would affect lenders with more than $100 billion in assets.
The proposal, which the Office of the Comptroller of the Currency is advancing without the backing of other U.S. banking agencies, faces an uncertain path with the Trump administration ending and President-elect Joe Biden set to take office in January. While the White House has signaled that Brooks will be nominated for a full five-year term at the agency, the law allows Biden to fire him so long as he communicates the reason to the Senate.
Banks avoiding politically sensitive customers has been a key talking point for Republican lawmakers, who have raised the specter of Operation Choke Point, an effort by the Justice Department under President Barack Obama to ferret out money laundering in industries it considered high-risk — including payday lenders, firearms dealers, escort services, drug sales, pornography and online gambling.
“We are seeing a disturbing trend in the financial services industry — the intentional discrimination of entire industries, such as firearms manufacturers, by the largest banks in the United States,” Senate Banking Committee Chairman Mike Crapo, an Idaho Republican, said in a Friday statement praising the OCC proposal.
Republican lawmakers have long argued that regulators had exceeded their authority in directing banks to turn away legal businesses, arguing that politics shouldn’t have a place in banking — a sentiment echoed in the OCC plan.
By Jesse Hamilton, Bloomberg, 20 November 2020
Read more at Bloomberg
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