OCC Finalizes Fair Access Rule As One of Final Moves Before Biden Administration Assumes Office
As one of its last moves before the Biden administration assumed office, the Office of the Comptroller of the Currency (OCC) finalized a rule to ensure fair access to banking services from large national banks, federal savings associations, and federal branches and agencies of foreign bank organizations. The rule codifies OCC guidance that banks should administer risk assessments of individual customers rather than make broad decisions about an entire group of customers’ access to services.
“Banks should not terminate services to entire categories of customers without conducting individual risk assessments,” said Brian Brooks, who served as Acting Comptroller of the Currency until he left the agency on January 14. “It is inconsistent with basic principles of prudent risk management to make decisions based solely on conclusory or categorical assertions of risk without actual analysis.”
The rule has received criticism because it prevents banks from refusing to do business with high-risk, controversial industries like oil drillers and gun manufacturers based on personal beliefs, legal, or politically motivated reasons. Compliance Week also noted criticism that the rule was finalized on Brooks’ last day, and that the current leadership structure would likely change under Biden’s administration.
House Democrats, including Congresswoman Maxine Waters (D-Calif.), Chairwoman of the House Committee on Financial Services, sent a letter to Brooks expressing opposition to the rule, stating that it would increase systemic risks and inhibit corporate social responsibility.
“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,” they wrote.
American Banker highlighted that the rule is inconsistent with past guidance from the OCC that banks should not only assess potential risks of customers but should consider their public standing too. The American Bankers Association wrote that “there is no indication that Congress intended to expand the authority of the OCC to issue novel rules outside the scope of established consumer protection laws.”
Bank advocates also argued that the requirement to deny customers on risk assessment alone would be a major compliance problem. Greg Baer, CEO of Bank Polity Institute, wrote that the requirement “creates costly and burdensome documentation requirements.”