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The OCC proposes a rule change that obliges large US banks to offer and provide fair access to financial services to anyone who wants them. The proposal seeks to clarify the obligation of large banks to provide equal access to financial services in a manner consistent with the mandate of the Dodd-Frank Act.
Discrimination against disadvantaged companies
The Dodd-Frank Act already recognizes a broad and long-standing anti-discrimination principle that individuals have the right to be treated fairly by national banks. The Office of the currency controller (OCC) proposed rule change now seeks to end persistent discrimination against “underprivileged” companies such as crypto companies. The OCC action would have the force and effects of law and allow the agency to take supervisory or enforcement action, as appropriate.
In a public notice on the proposed rule change, the OCC argues that “some large banks continue to use category-based risk assessments to deny customers access to financial services.” Apparently, the banks have continued with the practice despite previous requests by the OCC to “render the services they offer to all customers, except to the extent that individual customer-specific risk factors dictate otherwise.”
The OCC said it wants banks to use the “principle of customer risk assessment based on individuals rather than category” and this has been “reinforced in numerous OCC reports, testimonies from OCC officials and other press releases from the OCC agency”. However, despite repeated OCC reminders, banks have not paid some attention to pressure from some organizations. According to the notice:
Banks often react to pressures from supporters across the political spectrum whose policy goals are met when banks deny certain categories of customers access to financial services.
The OCC hopes to use the new powers gained from the rule changes to enforce the provisions of the Dodd-Franck Act by countering the powerful lobbyists.
Operation Chokepoint
Meanwhile, Marco Santori, the chief legal officer (CLO) of cryptocurrency exchange Kraken, reacts to the OCC proposal. Santori, who applauds the proposed rule change, says that “OG cryptocurrencies know that the only biggest obstacle to widespread adoption has been and continues to be the lack of access to banking services”.
Specifically, Santori clears the so-called “Operation Chokepoint”, a notorious plot by some government agencies that “pushed banks to cut off access to financial services to disadvantaged (but not illegal) sectors of the economy”. The OCC, which itself was not part of the plot, argues that the now exposed and discredited transaction cannot be the basis for denying access to financial services.
In a Twitter wireSantori states that “in its early days, bitcoin was involved in Operation Chokepoint, and cryptography more broadly is still involved today.” The CLO thus provides a reason why it was necessary for the “government to tell a private bank who it should and should not serve.”
Santori explains:
Well, in the first place it was the government that granted the banks monopoly power over the banks. If you support a free market, why oppose the government that limits the monopolist’s discretion? This proposal limits the abusive consequences of the monopoly.
Santori says he hopes “Democrats and other leftists” will not oppose the changes.
What do you think of the OCC proposal? Share your thoughts in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons
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