OCC Issues Rule Forcing Oil, Gun Lending as Acting Chief Exits
OCC Issues Rule Forcing Oil, Gun Lending as Acting Chief Exits
(Bloomberg) -- Wall Street lenders will face new orders barring them from refusing to work with businesses solely because of perceived reputational risk under a final rule issued Thursday by the Office of the Comptroller of the Currency.
The regulatory bombshell known as the “fair access” rule is being dropped on the same day the agency’s acting chief, Brian Brooks, is resigning after eight months on the job. The rule, which has been criticized by both bankers and progressive lawmakers, could be targeted for reversal under the Congressional Review Act after Democrats take control of the Senate.
“When a large bank decides to cut off access to charities or even embassies serving dangerous parts of the world or companies conducting legal businesses in the United States that support local jobs and the national economy, they need to show their work and the legitimate business reasons for doing so,” Brooks said in a statement.
Key Details
- The new regulation, set to take effect April 1, generally affects banks with more than $100 billion in assets. The final rule is largely unchanged from the version proposed in November, amid banking industry complaints over the unusually short time allowed for public comment.
- Affected banks will be required to make risk assessments of each potential customer without rejecting them because of the nature of their business -- as long as it’s legal.
- The rule comes in the wake of a movement among big banks to shut out some firearms businesses, oil financing and other industries out of concern the relationships could harm their reputations.
- “The rule lacks both logic and legal basis, it ignores basic facts about how banking works, and it will undermine the safety and soundness of the banks to which it applies,” Bank Policy Institute President and Chief Executive Officer Greg Baer said in a statement. “Its substantive problems are outweighed only by the egregious procedural failings of the rulemaking process, and for these reasons it is unlikely to withstand scrutiny.”
- Brooks chose to leave the agency this week before President-elect Joe Biden had a chance to fire him next week, leaving OCC veteran Blake Paulson stepping in as acting comptroller.
- Biden has been said to be considering former Treasury Department official Michael Barr or University of California at Irvine law professor Mehrsa Baradaran as finalists to be nominated for the post.
- As Democrats take control of the Senate, they will have the ability to deploy the Congressional Review Act to rid the government of some of the Trump administration’s most recent rules.
- Senator Sherrod Brown, who will run the Banking Committee, has said there will certainly be a list of rules targeted, though he didn’t offer specifics.
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