November 20, 2020
By Brian P. Brooks
The American sportsman is at risk of being cancelled.
Despite American outdoor enthusiasts consistently doing more for conservation and the environment than almost any other sector of our population, shooting sports are getting caught up in politics and pressure on banks to cut off funding and services to gun and ammunition manufacturers and dealers.
If successful, the powerful interests at work will restrict Second Amendment rights and availability of sporting arms by suffocating the industry from capital and financing that make them possible. Rather than winning national policy debates through elections and facing the legal substrate of our great Constitution, loud factions are simply pestering bankers to succumb to their political will. We can’t rely on all bank executives to be as strong and courageous as American sportsmen.
As the head of the agency that oversees the federal banking system, I have heard complaints from other industries facing the same threats—oil and gas companies, electric utilities, large farms and ranches, gas-fueled automobile makers, independent ATM operators, pawn shops, even law enforcement industries. That's wrong.
Everyone deserves fair access to banking services. To prevent banks from discriminating against legal businesses and individuals, the Office of the Comptroller of the Currency, which oversees the nation’s banking system, recently proposed a rule to require bankers to do what they do best, assess risk and underwrite credit decisions.
By requiring banks to assess their customers’ risks individually, we can stop the cancellation of entire categories of industries because they may be unpopular today. The proposed rule would strengthen and codify long-standing guidance that upholds the principle of nondiscrimination so everyone can access our nation’s banking system.
Make no mistake, bankers should decide who to bank and who qualifies for their loans and services. But they should base those decisions on sound, quantifiable risk management and underwriting criteria. Those decisions should not be based on politics and powerful special interests.
Banks are special, particularly national banks and federal thrifts that are chartered to operate nationwide under a system of federal supervision that enhances customer confidence in their safety and soundness. Banks display a sticker on their doors testifying that the federal government stands behind their insured deposits. Banks have access to the Federal Reserve System that the average person and companies do not. Because of this special status, in 2010 Congress required my agency to ensure banks provide fair access to their services in addition to our 150-year mission ensuring they operate in a safe and sound manner.
The proposal is simple. Banks may not exclude whole sectors of the economy from access for reasons unrelated to objective, quantifiable risks specific to an individual customer. Banks retain the right to choose what businesses they undertake but if a bank provides a service, it cannot deny that service to a customer except on the basis of an objective analysis of the riskiness of that client. Banks are not free to refuse credit simply because they disagree with the business their customer is in.
Banks do not set national policy. They do not choose what goods and services are available to consumers. Nor do they determine what industries are legal. It is the job of our democratically elected government to make those decisions. It is a bank’s job to assess and manage risks of serving and financing their customers while providing non-discriminatory access for all legal businesses and individuals. It’s my agency’s job to make sure they do, and make sure they meet the needs of the consumers, businesses, and communities they serve.
With the new rule, bank examiners would be armed with the authority to hold banks accountable for making decisions about who gets access to banking services and credit fairly and based on objective criteria. Moreover, the rule means that examiners can tell bankers found discriminating against legal businesses based on political whim and special interests, "that dog don’t hunt."
About the author: Brian P. Brooks is Acting Comptroller of the Currency.