WASHINGTON (Reuters) – Major U.S. banks on Wednesday pushed back on a proposal to bar them from snubbing controversial business sectors, such as oil and gas giants, in an unlikely turn of events that has pitched Wall Street against one of the Trump administration’s industry-friendly regulators.
In a letter to Acting Comptroller of the Currency Brian Brooks, the Bank Policy Institute (BPI) asked for more time to assess the “unprecedented” proposal and requested to see data the agency used to assess its economic impact.
The letter was signed by three other major Washington bank groups, which combined represent dozens of major lenders including JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corp (NYSE:BAC). Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS).
Last week, the Comptroller proposed a rule ensuring “fair access” to bank services for all types of legal businesses, based on a specific customer risk-assessment rather than broad client categories. It applies to the largest banks that may wield pricing power over sectors of the economy.
The proposal aims to address concerns among Republicans and business groups that oil and gas majors are being deprived of funding as banks come under increasing investor pressure to curb lending to controversial sectors.
“It’s a completely unworkable government mandate designed to address a particular political problem but would by its terms require every covered bank to offer every financial product to every business and consumer in the country,” John Court, general counsel at BPI said. He said the agency doesn’t appear to have the legal authority to propose such a sweeping rule.
Banks have a relatively short 45-day period to review the proposal if Brooks, who is seen by Democrats and consumer groups as too industry-friendly, doesn’t permit more time.
Two industry executives said they believed Brooks, who is expected to be nominated of for the permanent Comptroller role shortly, is trying to fast-track the rule before Democratic President-elect Joe Biden takes office in January.
“Given that this rule formalizes guidance that has been issued and reinforced by the OCC since at least 2014, we are surprised that the banks are surprised,” said a spokesman for Brooks, adding the agency looked forward to reviewing all comments.