Wall Street banks slam lending proposal as ‘unworkable’ and ‘political’

WASHINGTON (Reuters) – Main U.S. banks on Wednesday pushed again on a proposal to bar them from snubbing controversial enterprise sectors, reminiscent of oil and gasoline giants, in an unlikely flip of occasions that has pitched Wall Street towards one of many Trump administration’s industry-friendly regulators.

In a letter to Performing Comptroller of the Foreign money Brian Brooks, the Bank Coverage Institute (BPI) requested for extra time to evaluate the “unprecedented” proposal and requested to see knowledge the company used to evaluate its financial affect.

The letter was signed by three different main Washington bank teams, which mixed signify dozens of main lenders together with JPMorgan Chase & Co., Bank of America Corp. Goldman Sachs and Morgan Stanley.

Final week, the Comptroller proposed a rule guaranteeing “fair access” to bank companies for all sorts of authorized companies, based mostly on a selected buyer risk-assessment reasonably than broad shopper classes. It applies to the biggest banks that may wield pricing energy over sectors of the economic system.

The proposal goals to deal with issues amongst Republicans and enterprise teams that oil and gasoline majors are being disadvantaged of funding as banks come underneath growing investor stress to curb lending to controversial sectors.

“It’s a completely unworkable government mandate designed to address a particular political problem but would by its terms require every covered bank to offer every financial product to every business and consumer in the country,” John Courtroom, normal counsel at BPI mentioned. He mentioned the company doesn’t seem to have the authorized authority to suggest such a sweeping rule.

Banks have a comparatively quick 45-day interval to evaluate the proposal if Brooks, who’s seen by Democrats and shopper teams as too industry-friendly, doesn’t allow extra time.

Two {industry} executives mentioned they believed Brooks, who is anticipated to be nominated of for the everlasting Comptroller position shortly, is making an attempt to fast-track the rule earlier than Democratic President-elect Joe Biden takes workplace in January.

“Given that this rule formalizes guidance that has been issued and reinforced by the OCC since at least 2014, we are surprised that the banks are surprised,” mentioned a spokesman for Brooks, including the company regarded ahead to reviewing all feedback.