Responding to grassroots pressure and shareholder activism, five of the six largest U.S. banks have decided they want no part of financing fossil fuel drilling in Alaska's Arctic National Wildlife Refuge—but that isn't stopping the Trump administration from what critics on Friday called bullying banks into funding oil and gas extraction.
"No amount of saber-rattling in the final days of the Trump administration is going to change the fact that Arctic drilling is a risky investment that any savvy financial institution would stay far away from."
—Ben Cushing, Sierra Club
The Wall Street Journal reports the Office of the Comptroller of the Currency on Friday proposed a new rule that would bar financial institutions from refusing to lend to entire categories of lawful businesses. In the name of "fair access," the proposed rule would force banks to finance not only the fossil fuel industry that is largely responsible for the ever-worsening climate emergency, but also other highly controversial sectors such as for-profit private prisons and firearms manufacturers.
"We need to stop the weaponization of banking as a political tool," Brian Brooks, the acting comptroller, told the Journal. "It's creating real economic dislocations."
This is a desperate attempt by the outgoing Trump administration to help the failing fossil fuel industry. It's not going to work. https://t.co/HrgbBWzIrW
— Stop the Money Pipeline (@StopMoneyPipe) November 21, 2020
Under the proposal—which came on the heels of complaints by Republican politicians that banks are discriminating against Big Oil—institutional lenders would only be permitted to decline loans if an applicant failed to meet "quantitative, impartial, risk-based standards established by the bank in advance."
The proposal will be open for public comment until January 4, 2021 before it is subject to final approval. That would leave Brooks just over two weeks to enact the measure before President Donald Trump leaves office on January 20. The financial services industry is likely to push back against the proposal, fearing it could force banks to finance individuals, entitites, or endeavors against their will.
In response to the growing number of banks ruling out funding for risky Arctic drilling, a new proposal from the Trump admin aims to force them to ignore the risks, invest anyway. https://t.co/yB5WWqTmP5
— Sierra Club (@SierraClub) November 20, 2020
Critics say the measure is meant to compel banks to finance destructive drilling in the pristine Arctic National Wildlife Refuge, which is home to the Gwich'in Indigenous people and hundreds of animal species. On Tuesday, the Trump administration began accepting requests from fossil fuel companies staking claims to where they want to drill for oil and natural gas. This, as Arctic temperatures warm to record high and Arctic sea ice recedes to record low levels.
Good time to revisit banking law expert Adam Levitin's takedown when @BrianBrooksOCC first floated this idea: OCC is "suggesting legal theories so farfetched that would be laughed out of a courtroom if it actually tried to act on them...it's embarrassing" https://t.co/JgY3Cesyyt
— Ben Cushing (@bmcushing) November 20, 2020
Sierra Club campaign representative Ben Cushing fired back against GOP "discrimination" claims.
"Contrary to the claims of oil-backed politicians, banks don't want to finance more drilling in the Arctic not because of some vast liberal conspiracy, but because it's bad business," he said in a statement Friday. "The idea that this constitutes discrimination is ludicrous. No amount of saber-rattling in the final days of the Trump administration is going to change the fact that Arctic drilling is a risky investment that any savvy financial institution would stay far away from."