Proposed Rule Seeks To Stop Banks From Denying Services To Gun Industry

The Office of the Comptroller of the Treasury is one of those government agencies that few people have heard of, but a proposed rule put forth by the office could have a huge impact on the firearms industry. Brian Brooks, the acting head of the office, wants to bar banks from denying services to businesses in industries that are viewed with disfavor by Democrats like oil and gas and firearms.

It’s a great idea, as far as I’m concerned, because we’ve seen efforts like Operation Choke Point (which began in the Obama administration) used to bully banks into dropping relationships with gun companies and even independent gun stores. One of the problems with the new proposed rule, however, is that there’s likely going to be a new administration in a couple of months, and typically it takes far longer for a rule to go through the public comment period before it’s adopted and rejected.

Brooks wants to expedite the public comment period for this new rule, but gun control groups and lobbyists for the banking industry are pushing back.

The move by Mr. Brooks has achieved the rare feat of uniting progressive groups and Wall Street lobbyists against the proposal, which addresses a long-time Republican talking point and has support among business groups in the affected industries.

“We’re still digesting the oddity and enormity of this proposal,” John Court, the top lawyer at the Bank Policy Institute, said in a statement. Washington-based BPI and other banking industry groups wrote in a letter to the OCC dated Wednesday that the comment deadline comes too soon for them to sufficiently analyze the proposal, and that an additional 30 days would be warranted.

Court called the proposal “a completely unworkable government mandate designed to address a particular political problem” that would “require every covered bank to offer every financial product to every business and consumer in the country.”

It sounds like Court has had enough time to study the proposal if he feels comfortable calling it “completely unworkable,” so I don’t buy his excuse about needing more time to study the issue. What Court and others really want is to extend the public comment period to the point that it will end after Joe Biden’s likely inauguration. Once Biden’s in office, his administration could suspend or revoke the proposed rule, leaving huge financial institutions like Bank of America and Citigroup to continue to block access to their services for those working in the firearms industry.

Sounds awfully swampy, doesn’t it? By the way, Court is absolutely wrong about the proposed rule requiring banks to offer every financial product to every consumer or business, as Brooks himself has made clear.

“We’re not just talking about calls to ban firearms manufacturers or calls to de-bank fracking companies,” Brooks said, according to American Banker. “We’re talking about calls to de-bank independent ATM operators, calls to de-bank Planned Parenthood and other family planning organizations, calls to de-bank agricultural operations. These things are not politically partisan.”

Under the proposal, banks could still deny services but would have to justify their reasoning by showing the person or business failed to meet “quantitative, impartial risk-based standards established by the bank in advance.”

The OCC said in the proposal the crux is not that banks are denying services to companies in a particular industry. It’s that the reasoning is “based on criteria unrelated to safe and sound banking practices,” such as “personal beliefs and opinions on matters of substantive policy that are more appropriately the purview of state and Federal legislatures,” the agency said.

Besides the fight over the proposed rule, we may see a battle in the Senate as well. President Trump wants senators to confirm Brooks to a full five-year term in the OCC, but Biden could try to remove Brooks once he takes office, though he would have to rely on “legal authority that has never been used,” in the words of BankingDive.com’s Dan Ennis.

The Senate returns to work next week, and while a COVID-19 relief bill will be the biggest priority once they gavel in, I expect that Mitch McConnell will want to move fairly quickly to confirm Brooks to his position and deny Biden the opportunity to staff the office with an anti-gun axe to grind. In the meantime, if you’d like to comment on the proposed rule, you can submit your comment here.