Though the need to go…
Green technology is quickly emerging…
U.S. banks want to continue choosing whether to lend money to the oil and gas industry according to risk and reputation management practices, asking a regulator not to proceed with a new rule that could force them to deal with such companies.
The Office of the Comptroller of the Currency (OCC) has recently proposed a new rule to ensure the so-called fair access to financial services, aiming to finalize a rule soon.
The proposal has drawn numerous comments during the 45-day comment period that ended on Monday, including that of the Bank Policy Institute (BPI)—a nonpartisan public policy, research, and advocacy group, representing the nation’s leading banks. BPI called on the OCC this week to withdraw its “fair access” proposal, which, the banks say, “would micromanage banks’ business decisions in an unprecedented way.”
According to the banks, the new rule “would also appear to prohibit banks from using subjective judgment and qualitative considerations, including reputational risk, in deciding whether to provide a financial service, which is entirely inconsistent with how the OCC has historically expected banks to make risk management decisions.”
Banks have grown increasingly aware of the reputational consequences of providing lending to oil and gas projects in sensitive areas such as the Arctic, for example.
In the United States, Goldman Sachs said in December 2019 that it would decline to finance new Arctic oil exploration and production and new thermal coal mine development or strip mining. Wells Fargo, JPMorgan, and Deutsche Bank have also said they would stop financing new oil and gas projects in the Arctic.
In their comments on the proposed rule, the Wall Street banks said that the proposal’s “approach to promoting fair access is impractical, unworkable and inconsistent with safe and sound banking practices.”
“We are considering all of the stakeholders comments as we prepare a final rule,” Bryan Hubbard, a spokesman for the OCC, told Bloomberg.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.