Home music industry Banks denounce rule that would force loans to oil and weapons companies

Banks denounce rule that would force loans to oil and weapons companies

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Wall Street banks ask key regulator to drop proposed rule that would force them to do business with energy and gun companies that could subject them to public contempt, questioning the base legal action which they claim is being unfairly accelerated.

The “fair access” rule proposed by the Office of the Comptroller of the Currency on Nov. 20 would place excessive burdens on lenders and could threaten their business models, banking industry groups said in comment letters to the agency . Industry groups also challenged the agency’s power to issue the rule, arguing that the 45-day comment period that ended on Monday did not give them enough time to respond.

Brian Brooks, the agency’s acting head, wants to ban banks from refusing to serve legal businesses – such as those in the petroleum industries, prisons and guns – that they might otherwise avoid due to the risk damage their reputation. The agency’s effort was launched after Republican lawmakers complained about banks’ refusal to fund energy projects, citing concerns about climate change. Lenders, including Citigroup Inc. and Bank of America Corp., also have limited ties to the gun industry.

Brooks, who has been appointed by President Donald Trump for a full term as comptroller, faces time constraints to end the rule as he could be replaced after President-elect Joe Biden takes office on January 20 .

“The fundamental practical problems of the proposal are compounded by its fundamental legal loopholes,” the Bank Policy Institute said in its letter. This would “effectively replace the traditional business of the US bank” by abandoning a company’s risk management decisions for a system in which the regulator dictates “to whom financial services are to be provided.”

The proposal has attracted thousands of letters of comment, with many supporting its demand that the big banks open their doors to gun companies.

Consumer groups and Democratic lawmakers have joined with lenders in criticizing the rule, focusing more on the issue of climate change than on banks’ business models.

“This proposed rule directly undermines the [Office of the Comptroller of the Currency’s] responsibility to ensure a safe and healthy banking sector, ”said Sen. Brian Schatz, D-Hawaii, who co-signed a letter of comment with a group of Congressional Democrats. “It is extremely disturbing that a federal regulator is using its supervisory authority to pressure banks into financing projects that the banks themselves have deemed too risky.”