OCC Reports: Banks Restricted Services to Customers Engaged in Lawful Activity
Commentary by Thomas Delaney
In preliminary findings based on a supervisory review, the Comptroller of the Currency ("OCC") found that nine of the largest national banks maintained policies between 2020 and 2023 that restricted access to banking services despite customers' lawful business activities.
The OCC review was conducted in accordance with the President's Executive Order "Guaranteeing Fair Banking for All Americans" to determine whether these institutions debanked or discriminated against customers, or potential customers on the basis of their political or religious beliefs, or lawful business activities.
The OCC identified instances where at least one bank-imposed restrictions on certain industry sectors because they engaged in "activities that, while not illegal, are contrary to [the bank's] values." Sectors subjected to restricted access included oil and gas exploration, coal mining, firearms, private prisons, tobacco and e-cigarette manufacturers, adult entertainment, and digital assets. The OCC found that these or similar policies and practices were in place at each of the banks reviewed.
The OCC said it continues to review thousands of complaints to identify instances of political and religious debanking. Comptroller Jonathan V. Gould stated that "the OCC will hold banks accountable for these actions and ensure unlawful debanking does not continue."
Commentary
If there was any doubt, the OCC’s preliminary findings regarding information it has obtained in the aftermath of the issuance of Executive Order 14331, confirms that the OCC is serious about following through on President Trump’s initiative to guarantee fair banking for all Americans. Based on a review of nine of the largest national banks, the preliminary findings state that the OCC has observed that between 2020-2023, banks maintained, "public and nonpublic polices restricting certain industry sectors’ access to banking services." The OCC is continuing to assess the impact bank policies had on affected industries and the American economy. However, based on the preliminary findings as well as guidance issued in the past few month, the clear message from the OCC is that reputation risk can no longer be considered as part of the credit approval process and banks may no longer adhere to policies and procedures that resulted in unlawful debanking in such sectors such as coal mining, oil and gas exploration, firearms manufacturing, private prison construction or adult entertainment. When the OCC evaluates applicable statutory and regulatory factors for licensing approvals, both a bank’s past record and its and current policies will be taken into consideration.