US regulator OCC hits Wall Street with last-minute lending rule
A ban by the Office of the Comptroller of the Currency on banks denying services to whole sectors could hit their corporate responsibility efforts
There was a mix of anger and bafflement on Wall Street late on Thursday January 14 as the Office of the Comptroller of the Currency (OCC), a US banking regulator, sprung a new rule on the sector in the 11th hour of the administration of outgoing president Donald Trump.
This rule requires banks to risk-assess customers on an individual basis rather than make decisions based on an entire category of customer. It means that banks can no longer adopt policies on the basis of entire industries or types of business activity. This means that their ability to make lending decisions based on corporate responsibility policies is severely constrained.
It was approved by acting comptroller Brian Brooks on what was his very last day in the post. It was presented by the OCC as ensuring “fair access to banking services”, but banks argue it is rushed and deeply flawed.
“Banks should not terminate services to entire categories of customers without conducting individual risk assessments,” the OCC said in a statement on Thursday night announcing the decision. “Elected officials should determine what is legal and illegal in our country.”
As it stands [the rule] pitches one corporate and social responsibility priority against another
The OCC cited the Dodd-Frank Act of 2010 in support of its rule, noting that the legislation passed in the wake of the global financial crisis expanded the mandate of the regulator to ensure fair access to banking services.