Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, and 22 other Financial Services Committee Democratic Members sent a letter to Brian Brooks, Acting Comptroller of the Currency, urging him to withdraw an Office of the Comptroller of the Currency (OCC) Notice of Proposed Rulemaking (NPRM) that would increase systemic risks to the financial system and discourage corporate social responsibility.
“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,” the lawmakers wrote.
“A consumer cannot have fair access to financial services if they are being discriminated against by banks. However, rather than protect individuals from discrimination by banks to ensure they have fair access to financial services, the NPRM would force banks to serve major fossil energy companies despite the risks they may pose to the bank and the financial system. 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.”
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Mr. Brian Brooks
Acting Comptroller of the Currency
Office of the Comptroller of the Currency
400 7th Street S.W.
Washington, D.C. 20219
Acting Comptroller Brooks:
We write to express our opposition to the Office of the Comptroller of the Currency’s (OCC) recent Notice of Proposed Rulemaking (NPRM) regarding “fair access to financial services.”[1] Instead of implementing the OCC’s statutory mission to ensure all consumers have fair access to financial services,[2] 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. We urge the OCC to promptly withdraw this misguided NPRM that would increase systemic risks to the financial system, discourage corporate social responsibility, and do nothing to ensure communities of color are better served by the banking system.
As the NPRM notes, the OCC has an obligation to protect the “safety and soundness” of the financial system. The proposed rule cites this obligation as justification for placing special emphasis on compliance among banks with $100 billion or more in assets, due to their “dominant market position” and “systemic importance.” Far from addressing systemic risks among larger banks, however, this proposal would undermine, not protect, the safety and soundness of the banking system in crucial ways. Firstly, the proposed rule would prohibit banks from depriving certain services to entire sectors, requiring banks to provide the fossil fuel industry with access even to risky and complicated products.[3] Secondly, by guaranteeing access to any large bank product or service for the fossil fuel industry, the NPRM would undercut regulatory efforts to address the physical and transition risks of climate change, which the Federal Reserve recently highlighted in its latest financial stability report.[4] Relatedly, an advisory subcommittee to the U.S. Commodity Futures Trading Commission (CFTC) noted in a major report on climate risks, “A central finding of this report is that climate change could pose systemic risks to the U.S. financial system.”[5] Contrary to the NPRM, an extensive staff report of the U.S. House Select Committee on the Climate Crisis urged financial regulators to identify and take steps to mitigate climate-related risks in the financial sector, endorsing policies included in H.R. 5194, the Climate Change Financial Risk Act drafted by Rep. Sean Casten (D-IL), among other proposals.[6]
Moreover, the quantitative-only risk analysis that would be required by the NPRM discounts other material risks, including public safety, to the extent financial institutions voluntarily chose to adopt a decision-making framework intended to reduce gun violence when determining who and how they serve potential customers. Similarly, we are concerned the NPRM could chill efforts by financial institutions to make use of Environmental, Social, and Governance (ESG) and similar ratings that include qualitative considerations.[7]
Additionally, the OCC’s NPRM states that the Dodd-Frank Act amendments to 12 U.S.C. 1 recognized a “longstanding anti-discrimination principle that individuals are entitled to be treated fairly by national banks and Federal savings associations (banks).” While the proposed rule attempts to draw a distinction between this anti-discrimination principle embodied in the Equal Credit Opportunity Act, Community Reinvestment Act, and other statutes, and the concept of “fair access to financial services,” we believe those concepts are interrelated. A consumer cannot have fair access to financial services if they are being discriminated against by banks. However, rather than protect individuals from discrimination by banks to ensure they have fair access to financial services, the NPRM would force banks to serve major fossil energy companies despite the risks they may pose to the bank and the financial system. 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. After Energy Secretary Dan Brouillette likened fossil fuel divestment to redlining earlier this year, Chairwoman Maxine Waters (D-CA) sent a letter rejecting a similarly inappropriate comparison.[8]
If the OCC was truly serious about providing “fair access to financial services,” it would halt efforts to undermine the Community Reinvestment Act (CRA). In an April 2020 letter to your predecessor, we asked the OCC to delay rulemakings unrelated to the pandemic response, including the OCC’s NPRM with respect to the CRA, during this unprecedented crisis.[9] We urged the OCC to work with the Federal Reserve to develop a new, joint proposal that would be consistent with the purpose of the CRA. Instead, the OCC pushed out a final rule that was so harmful to the CRA that the U.S. House of Representatives repudiated it by passing H.J. Res 90, a resolution of disapproval to nullify the rule.[10] Troublingly, the OCC recently decided to release yet another NPRM with the purpose of gathering data that should have been collected beforehand to serve as the basis of any major rule on CRA before it was finalized.[11]
While we oppose the NPRM, other stakeholders should have more time to provide any comments they may have to the OCC after reviewing the proposed rule. Since the onset of the COVID-19 pandemic, the House Financial Services Committee has stressed that a severe economic recession is the wrong time to press forward with rulemakings unrelated to the ongoing public health and economic crisis. With public attention rightly focused on a surging virus and economic fallout, we believe the comment period should be extended.
In conclusion, we urge you to withdraw this harmful NPRM and instead use your authority to combat systemic climate risks, promote corporate social responsibility, and take steps to ensure that all consumers – particularly minority consumers, minority-owned businesses, and communities of color who have been continuously discriminated against – are, in fact, receiving fair access to banking services during and after this pandemic.
Sincerely,
Chairwoman Maxine Waters
Rep. Carolyn B. Maloney
Rep. Nydia M. Velázquez
Rep. Brad Sherman
Rep. Gregory W. Meeks
Rep. Wm. Lacy Clay
Rep. Al Green
Rep. Emanuel Cleaver
Rep. Ed Perlmutter
Rep. Jim A. Himes
Rep. Bill Foster
Rep. Joyce Beatty
Rep. Denny Heck
Rep. Al Lawson
Rep. Michael San Nicolas
Rep. Rashida Tlaib
Rep. Cindy Axne
Rep. Sean Casten
Rep. Ayanna Pressley
Rep. Jennifer Wexton
Rep. Stephen F. Lynch
Rep. Madeleine Dean
Rep. Jesús “Chuy” García
[2] 12 USC §1, as modified by Section 314 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, states, “There is established in the Department of the Treasury a bureau to be known as the ‘Office of the Comptroller of the Currency’ which is charged with assuring the safety and soundness of, and compliance with laws and regulations, fair access to financial services, and fair treatment of customers by, the institutions and other persons subject to its jurisdiction.”
[3] The banking industry itself has noted that “the proposal undermines rather than promotes safety and soundness.” See, for example, Bank Policy Institute, OCC Fair Access Proposal Issue Summary (Dec. 2, 2020).
