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Democrats push regulator to scrap proposed rule forcing banks to serve oil, gun companies

Democrats push regulator to scrap proposed rule forcing banks to serve oil, gun companies
© Greg Nash

The chairwoman of the House Financial Services Committee and nearly two dozen House Democrats urged a federal bank regulator Wednesday to scrap a potential rule forcing banks to serve oil, gas and firearm companies.

Rep. Maxine WatersMaxine Moore WatersProgressives grumble but won't sink relief bill over fewer stimulus checks Lawmakers, Martin Luther King III discuss federal responses to systematic racism The Hill's Morning Report - Presented by The AIDS Institute - Ahead: One-shot vax, easing restrictions, fiscal help MORE (D-Calif.) and 22 Democratic members of the Financial Services panel called on the Office of the Comptroller of the Currency (OCC) to back down from an attempt to prevent banks from spurning industries deemed controversial.

“Instead of implementing the OCC’s statutory mission to ensure all consumers have fair access to financial services, this rulemaking appears designed to force banks to ignore material risks posed by fossil energy companies, gun manufacturers, and other large corporations while providing them access to any banking product or service they want,” they wrote in a Wednesday letter to Acting Comptroller of the Currency Brian Brooks.

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The OCC in November announced it would propose a rule that would ban banks from rejecting customers based solely on the type of business they operate. The proposal followed announcements from several major banks over the past two years that they would refuse to serve firearm manufacturers or finance oil and gas drilling projects.

Republicans, who have called for federal action against banks that have rejected such companies, praised the OCC’s proposal. Some supporters of the OCC rule compare banks spurning controversial industries to the decades of discrimination Black and Hispanic Americans faced at the hands of the banking industry.

Democrats and bank industry groups, however, say the OCC’s proposal is a misguided and unnecessary attempt to push banks away from legal efforts they deem helpful to society. They argue that banks refusing to serve certain businesses is in no way comparable to the lack of access to financial services that still hinders minorities and low-income areas.

“The well-documented pattern of systemic discrimination in depriving communities of color of equal access to credit bears no resemblance to financial institutions taking actions to reduce their exposure to climate risk, as well as other financial stability risks identified by prudential regulators, and we find it offensive to make any comparison in that manner,” the Democrats wrote to Brooks.

The OCC’s proposal is not expected to be finalized before the end of President TrumpDonald TrumpBiden to sign executive order aimed at increasing voting access Albany Times Union editorial board calls for Cuomo's resignation Advocates warn restrictive voting bills could end Georgia's record turnout MORE’s term, and Brooks is likely to lose his job shortly after President-elect Joe BidenJoe BidenBiden to sign executive order aimed at increasing voting access Myanmar military conducts violent night raids Confidence in coronavirus vaccines has grown with majority now saying they want it MORE takes office on Jan. 20. 

But other battles between Democrats and Republicans over the financial industry’s role in climate change are expected to intensify throughout the Biden administration.

Dozens of House Republicans criticized the Federal Reserve for joining an international network of central banks and regulators dedicated to fighting climate change through the financial system. Democrats, on the other hand, have urged the Fed to test banks its supervises on climate-related risks they face. Progressive have also called on the Securities and Exchange Commission to order companies to disclose similar climate-related challenges and investments.