By Pete Schroeder
WASHINGTON (Reuters) – A number one U.S. financial institution regulator finalized a rule Thursday that prohibits massive banks from refusing to lend to sure enterprise sectors, after Republicans voiced frustration at what they noticed as a reluctance by banks to finance gun makers and vitality companies.
The rule, proposed in November by the U.S. Comptroller of the Forex, has been fiercely contested by banks which name it unworkable and politically motivated. It applies to banks with greater than $100 billion in belongings and stipulates that they need to present reliable enterprise causes for not offering companies to sure debtors.
The rule, pushed by Comptroller Brian Brooks, had been inspired by some Republicans annoyed by banks’ refusal to lend to sure sorts of companies, equivalent to gun producers and oil and gasoline corporations.
As a substitute, Brooks mentioned banks should consider every applicant on the deserves, and the rule would prohibit any blanket prohibition.
“It’s inconsistent with fundamental ideas of prudent threat administration to make selections based mostly solely on conclusory or categorical assertions of threat with out precise evaluation,” mentioned Brooks in a press release. “Furthermore, elected officers ought to decide what’s authorized and unlawful in our nation.”
The OCC finalized the rule on Brooks’s final day on the company.
The last-minute rule has been met broad condemnation, with client teams, Democrats and the banking trade in uncommon alignment in opposition. Banks say the rule takes away their means to make enterprise selections for themselves, and locations it within the palms of the federal government.
Banks are anticipated to push the incoming administration of President-elect Joe Biden and Democrats to discover a method to repeal the rule, and have urged they might problem it in court docket.
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