Patricia McCoy, a professor at Boston College Law School, said the change “gives a lot more leeway” than when it was first proposed.
The rule, which has an impact on banks with more than $ 100 billion in assets, is the final regulation of the eight-month tenure of Acting Currency Comptroller Brian Brooks, who is stepping down on Thursday.
“Brian Brooks did something I never thought possible: he united the banking industry and reform advocates,” said Isaac Boltansky, director of policy research at Compass Point Research & Trading, of the proposed rule. “They were united against a convoluted, ill-conceived and operationally problematic rule.”
“In addition to bypassing the traditional rulemaking process and ignoring the thoughtful comments of thousands of stakeholders, we believe it is a mistake for the OCC to mandate companies that banks must serve, ”Hugh Carney, senior vice president of ABA prudential regulation, said in a statement.
Democratic Senator Sherrod Brown, the new chairman of the Senate Banking Committee, echoed the sentiment of the ABA.
“Forcing banks to make dangerous investments is a bad idea,” Brown told CNN Business in an interview last week. “At the end of the day, it doesn’t serve the financial system or the country.”
Brown, a Democrat from Ohio, added that Brooks, the OCC regulator, “will join a long line of Trump candidates seeking their own past and future business interests.”
Uncertain fate for the ruler
Brooks said in a statement Thursday that banks “have to show their work” when cutting access to loans.
“Banks should not terminate services to entire categories of customers without carrying out individual risk assessments,” he said, adding that “elected officials should determine what is legal and illegal in our country” .
The rule is expected to go into effect in April, but it’s unclear if that will happen.
It is possible that lawmakers could override it through the Congressional Review Act, which allows Congress to override regulations imposed by the executive. For example, President-elect Joe Biden has pledged to tackle the climate crisis, including joining the Paris climate agreement.
Boltansky said he was “confident” that the Biden administration would strive to overturn the rule.
Banks are starting to move away from fossil fuels
Environmental groups feared the adoption of the rule would bypass the growing momentum of big banks to distance themselves from oil and coal companies whose long-term fortunes are threatened by the climate crisis.
“This proposed rule is a latest outrageous attempt to hamper progress in tackling climate change as a systemic financial risk,” Steven Rothstein, chief executive of Ceres Accelerator for Sustainable Capital Markets, said in a statement last week. .
With the intensification of the climate crisis, some major banks have recently ruled out making certain loans in the hope of mitigating both their reputational and credit risks.
Safety and solidity
McCoy, a former regulator with the Consumer Financial Protection Bureau, points out that climate change risk “poses long-term security and soundness issues for national banks that lend to the fossil fuel industry.”
“Banks have started to take steps to protect themselves against this [climate] risk, “Ceres said in the statement.” The OCC should help them along this path, not throw obstacles at them. ”