Trump administration proposal takes aim at bank pledges to avoid fossil fuel financing
A new Trump administration proposal is taking aim at banks’ attempts to exclude certain fossil fuel activities including fossil exploration in the Arctic from financing.
The Office of the Comptroller of Currency, which proposed the new rule on Friday, states that decisions by banks to not serve a specific customer should be based on individual risks, rather than a categorical exclusion.
It is billing the new rule as a measure to ensure fair access to financing.
“Fair access to financial services, credit, and capital are essential to our economy,” acting Comptroller of the Currency Brian Brooks said in a statement. “This proposed rule would ensure that banks meet their responsibility to provide their services fairly since they enjoy special privilege and powers because if the system fails to provide fairness to all, it cannot be a source of strength for any.”
Critics see an attempt to force banks to provide financing for fossil fuel production, particularly in the Arctic, something that most major U.S. banks have put self-imposed restrictions on.
“We’re not talking about a protected class of people … we’re talking about fossil fuel corporations,” said Ben Cushing, a Sierra Club senior campaign representative.
“The law is not designed to force banks to invest in projects that they deem to be overly risky and not good investments … banks have always had the discretion to decide what to invest in and what not to invest in,” Cushing said.
The rule calls out fossil fuel financing. It notes that banks told the agency that in 2019 and 2020, they “had decided to cease providing financial services to one or more major energy industry categories, including coal mining, coal-fired electricity generation, and/or oil exploration in the Arctic region.”
“Organizations involved in politically controversial but lawful businesses – whether family planning organizations, energy companies, or otherwise — are entitled to fair access to financial services under the law,” it said.
It also called out attempts to not finance private prisons, gun manufacturers and family planning services.
OCC spokesperson Bryan Hubbard said in an email that the agency would have a range of actions for enforcing the rule including fines but that it does not have the authority to make criminal arrests.
The public has until January 4 to comment on the rule, meaning that the Trump administration will not have a lot of time to finalize it prior to Joe Biden’s January 20 inauguration.
Several Republicans have accused banks of being discriminatory toward fossil fuel companies.
During an Oval Office meeting this year, Sen. Dan Sullivan (R-Alaska) accused banks of “starting to discriminate against American energy companies” and trying to “discriminate against investment in my state in Alaska.”
Trump later said he liked “the idea of looking into that.”
Soon after, Energy Secretary Dan Brouillette caused controversy when he compared the refusal to finance Arctic drilling to a tactic called “redlining” that was used to prevent minorities from buying homes.
In response to a letter from Alaska’s congressional delegation, Brooks said that he would “take a serious look at these banks’ actions” regarding lending to fossil fuel companies in the Arctic.
Cushing argued that the opposition to allowing banks to make decisions on this “flies in the face” of Republicans’ supposed commitment to the free market.
“They’re not actually committed to free market principles on their own. They’re committed to free market principles so long as they serve their favored industries,” he said.