On January 4, 2021, Better Markets joined efforts led by Public Citizen and The Center for Responsible Lending to oppose a proposed rule from the OCC that would essentially require banks to lend to risky and predatory industries, from oil companies that contribute to climate change to payday lenders that exploit consumers, especially in minority communities. As explained in the two comment letters, the proposed rule both exceeds the OCC’s statutory authority and contradicts the OCC’s mission of ensuring the safety and soundness of the banking system and protecting consumers from abusive lending practices.
The proposal is a politically motivated action taken in response to certain banks choosing to limit their exposure to a number of industries, including fossil fuel companies. In recent years, banks have rightly determined that businesses contributing to climate change, predatory lending, and other social and environmental ills present unacceptable financial and reputational risks. Under the law, and the OCC’s own long-standing position, these are appropriate factors for banks to weigh.
Yet, the OCC now turns its back on the law and its former regulatory approach. If finalized, the proposal would force banks to ignore legitimate risk assessments, thereby actually undermining the safety and soundness of banks and facilitating predatory lending practices that harm consumers. Banks should be encouraged to avoid high-risk lending, not forced into it. In both comment letters, we join the call for the OCC to immediately rescind this indefensible and misguided proposal.