On his last day at the Office of the Comptroller of the Currency, Acting Comptroller of the Currency Brian Brooks finalized a rule requiring the largest national banks to extend loans to politically controversial but legal firms.
The OCC’s so-called equitable access rule comes under the guise of increased access to credit to disadvantaged sectors like gun companies. However, it actually prevents banks from assessing and mitigating the various types of risks inherent in lending to contentious industries, including private prisons and fossil fuel companies. the the rule also compromises the very spirit of long-standing anti-discrimination banking laws.
As the co-founder of a non-profit company Bank, with a leader of this non-profit, we find the rule to be a blatant distortion of fair access and treatment laws, both of which aim to help those who have been excluded due to long-standing discrimination and persecution.
Lending discrimination occurs when financial institutions refuse a loan because of the applicant’s race, gender, or other protected status. In one joint comment letter submitted to the CCO, We argued that the reckless mandate cynically reinterprets fair lending to force big banks to turn a blind eye to excessive risk and businesses that harm vulnerable communities.
First, the existing fair lending rules aim to protect individual consumers (people), not corporations. Second, if the spirit of a fair loan is to ensure that disadvantaged people are not discriminated against, then offering the same protections to entire industries that harm those same people is particularly cynical and abusive.
Take the fossil fuel industry. In the four years since the signing of the Paris Agreement, global banks are estimated to have financed fossil fuel companies to the tune of $ 2.7 trillion, the big American banks being by far the biggest contributors.
Any comparison between redlining (denying ownership based on race and / or other protected class) and banks ending funding for Arctic drilling is offensive. The very use of the term redlining in this proposal only serves to dilute and delay real progress against truly unfair historic lending practices in the banking industry.
Since the proposal was launched at the end of 2020, financial institutions, banking sector associations, political leaders and advocates of economic well-being have struggled to respond to these deliberately misleading interpretations of fundamental concepts like equitable access and discrimination in loans – while trying to address the immediate crises facing Americans.
In a time of economic instability and insecurity heightened by the coronavirus pandemic, regulators should focus on protecting those interacting in the financial market with honest advice. Rather than rushing through cumbersome regulations, let’s work together to advance truly fair lending and access to credit for those who need it most.