Public Administration Reform: Lessons from the World Bank
Major US banks on Wednesday rejected a proposal to bar them from restricting lending to controversial business sectors such as oil and gas giants. Thus, Wall Street opposed one of the Trump administration’s regulators, hitherto friendly to the financial industry..
In a letter to the acting foreign exchange controller Brian brooks, Temporary Head of the Office of the Comptroller of the United States Currency (OSS) – An independent bureau within the United States Treasury Department, the Banking Policy Institute (BPI) has asked for more time to evaluate «unprecedented» proposals and requested data that the federal agency used to assess its economic impact.
The letter is signed by three other major Washington-based banking groups, which together represent dozens of major lending institutions, including JPMorgan Chase & Co., Bank of America Corp., Goldman Sachs and Morgan Stanley.
Last week, the OCC proposed a rule to ensure «fair access» to banking services for all types of legal enterprises, based on the risk assessment of a specific client, and not on broad categories of clients. This applies to the largest banks, which may have the ability to influence pricing in sectors of the economy..
The proposal aims to address concerns among Republicans and business groups that major oil and gas companies will lose funding as banks face increasing investor pressure to restrict lending to disputed sectors..
«This is a completely impracticable government mandate designed to solve a specific political problem, but its terms require that every bank that falls under its influence offers all financial products to every business and consumer in the country.», – said John court, General Counsel, BPI. He stated that the federal agency does not appear to have the legal authority to propose such a broad rule..
Banks have a relatively short 45-day period to consider the proposal unless Brooks, who Democrats see as too industry-friendly, gives more time..
Two top executives from the market said they believed Brooks, who is expected to soon be appointed to the position of permanent controller, will try to speed up the introduction of the rules before being elected as a Democratic president. Joe biden will take office in January.
«Given that this rule formalizes guidance that was developed by the OCC and has been strengthened since at least 2014, we are surprised by the banks’ reaction.», – said a Brooks spokesman, adding that the federal agency is looking forward to reviewing all comments.