OCC’s fair-access rule is anything but fair

In 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 provide loans to politically controversial but lawful businesses.

The OCC’s so-called fair-access rule is under the guise of increasing credit access to unfavored sectors like gun businesses. However, it actually prevents banks from assessing and mitigating the various types of risks inherent to making loans to contentious industries including private prisons and fossil fuel companies. The rule also undermines the very spirit of longstanding, anti-discrimination banking laws.

As co-founder of a nonprofit-owned bank, along with a leader of that nonprofit, we find the rule a gross distortion of fair access and fair treatment laws — both of which are intended to help those who have been excluded due to longstanding discrimination and persecution.

Discrimination in lending occurs when financial institutions deny a loan based on the applicant’s race, gender or other protected status. In a joint comment letter submitted to the OCC, we argued that the ill-considered mandate cynically reinterprets fair lending to require big banks to turn a blind eye to excessive risk and businesses that harm vulnerable communities.

First, the existing fair-lending rules are intended to protect individual consumers (people), not corporations. Second, if the spirit of fair lending is to ensure disadvantaged people are not being discriminated against, then affording the same protections to entire industries that harm those very same people is especially cynical and abusive.

Take the fossil fuel industry. In the four years following the signing of the Paris Agreement, it is estimated that globally banks financed fossil fuel companies to the tune of $2.7 trillion, with big U.S. banks the largest contributors by far.

Any comparison between redlining (denying homeownership based on race and/or other protected class) and banks halting Arctic drilling financing is offensive. This proposal’s very use of the term redlining serves only to dilute and delay genuine progress against truly unfair historical lending practices in the banking industry.

Since the proposal was floated in late 2020, financial institutions, bank industry associations, policy leaders and advocates for economic well-being have been scrambling to respond to these purposely misleading interpretations of fundamental concepts like fair access and discrimination in lending — all while trying to address immediate crises facing Americans.

During a time of increased economic instability and insecurity heightened by the coronavirus pandemic, regulators should focus on protecting people interacting in the financial marketplace through honest guidance. Rather than rush through burdensome regulations, let’s work together to advance truly fair lending and access to credit for people who need it most.