OCC rule would force banks to lend to gun companies and payday lenders: NPR



Just nine days into his tenure, President Trump’s administration is trying to push through a rule that could force banks to offer loans to gunmakers or fund high-cost payday lenders, even when banks do not want it. Banks don’t like it and neither do consumer watch groups. This is Chris Arnold from NPR.

CHRIS ARNOLD, BYLINE: This move follows announcements from some of America’s biggest banks that there are industries or projects they just don’t want anything to do with – drilling for oil in the Arctic National Wildlife Refuge in Alaska or granting loans to arms manufacturers who manufacture assault weapons. Some big banks have sworn it. Now, however, a Trump-appointed banking regulator is pushing forward a rule that would make it a discriminatory practice.

JOHN COURT: This is a very poorly constructed rule which in my opinion is not well thought out, is clearly designed and built in a hurry.

ARNOLD: John Court is head of regulatory affairs at the Bank Policy Institute, which represents the largest banks in the country. The rule was proposed in November after President Trump lost the election. The court says it appears the head of the Comptroller of the Currency’s office is scrambling to enact it ahead of the start of the Biden administration next week. According to Court, many financial companies are increasingly focusing on so-called environmental social governance – or ESG issues.

COURT: These include racial equality, the climate, other issues. And this proposal would clearly reduce a banking organization’s ability to meet or administer any so-called ESG goals it might have.

ARNOLD: The rule is based on the concept of equitable access to credit. This has long been linked to the prevention of racial discrimination. The OCC declined an interview. But its acting director, Brian Brooks, said in a press release, citing, “equitable access to financial services, credit and capital is essential for our economy.” Sounds good, except critics say the rule is really to force banks to offer financing to assault rifle makers or even predatory payday lenders who charge 300% interest rates.

REBECCA BORNE: Payday lenders not only harm people of color disproportionately, but they also target communities of color.

ARNOLD: Rebecca Borne is a lawyer at the Nonprofit Center for Responsible Lending.

TERMINAL: So the agency is really using civil rights language to do something that’s fundamentally inconsistent with the original intent of that language, you know, exacerbating the lending discrimination and masking it in that civil rights language. .

ARNOLD: The leading trade group for payday lenders – it’s called INFiN – said in a statement that the new rule would protect legal businesses from discrimination. If the Trump administration finalizes the rule before President-elect Biden takes office, John Court says it would make it harder for the new administration to overturn it, but not impossible. And, he says, if so, the banks would likely sue to try and stop the rule because, he says, the problem is something really big. Do banks have the right to make lending decisions based on what they think is good or bad for society?

COURT: It takes away the ability to make decisions. He takes it out of the bank and, in effect, gives it to a government mandate.

ARNOLD: The rule could also be repealed by Congress, especially since Democrats will now control both the House and the Senate.

Chris Arnold, NPR News.


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