Big Banks Blocked on Limiting Loans to Oil, Gun Companies (Dreamstime)
By Eric Mack | Friday, 15 January 2021 03:04 PM
Wall Street has been increasingly giving into public pressure by reducing exposure to industries like oil and gun companies, but the Trump administration has finalized a restriction on the practice in the name of "fair access."
The Office of the Comptroller of the Currency has argued banks with more than $100 billion in assets "may exert significant pricing power or influence over sectors of the national economy," Axios reported Friday.
The OCC proposed the move in November and has instituted a rule against big banks rejecting business loan applicants because of the industry in which they operate.
Citi, Goldman Sachs, and JPMorgan Chase have limited lending to certain types of energy projects, while Bank of America announced in 2018 it would stop financing some gun companies.
"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," acting Comptroller of the Currency Brian Brooks announced just hours before stepping down in the waning days of President Donald Trump's administration, per Axios.
"Moreover, elected officials should determine what is legal and illegal in our country."
The late-term action might be difficult to enforce, if not overturned entirely by the incoming Biden administration, according to the report.
"The rule lacks both logic and legal basis," Bank Policy Institute CEO Greg Baer told Axios. "It ignores basic facts about how banking works, and it will undermine the safety and soundness of the banks to which it applies. 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."