The OCC is proposing a rule change that compels large U.S. banks to offer and provide fair access to financial services to anyone that wants them. The proposition seeks to clarify the obligation of large banks to provide fair access to financial services in a manner consistent with the Dodd-Frank Actâ€™s mandate.
Discrimination Against Disfavored Businesses
The Dodd-Frank Act already recognizes a broad and longstanding anti-discrimination principle that individuals are entitled to be treated fairly by national banks. The Office of the Comptroller of the Currencyâ€™s (OCC) proposed rule change now seeks to end the persistent discrimination against â€œdisfavoredâ€ businesses like crypto companies. The OCC action would have the force and effect of law and enable the agency to take supervisory or enforcement action, when appropriate.
In a public notice on the proposed rule change, the OCC argues that â€œsome large banks continue to employ category-based risk evaluations to deny customers access to financial services.â€ Apparently, banks have continued with the practice despite previous calls by the OCC for them to â€œmake the services they do offer available to all customers except to the extent that risk factors particular to an individual customer dictate otherwise.â€
The OCC has said it wants banks to use the â€œprinciple of individual rather than category-based customer risk evaluationâ€ and this has been â€œreinforced in numerous OCC reports, the testimony of OCC officials, and other agency releases.â€ However, despite the repeated OCC reminders, banks have not taken heed due in part to pressure from certain organizations. According to the notice:
The OCC hopes to use the new powers gained from the rule changes to enforce provisions of the Dodd-Franck Act while thwarting powerful lobbyists.
Meanwhile, reacting to the OCC proposition is Marco Santori, the chief legal officer (CLO) at Kraken cryptocurrency exchange. Santori, who applauds the proposed rule change, claims that â€œcrypto OGs know the single greatest impediment to widespread adoption has been and continues to be the lack of access to banking services.â€
Specifically, Santori zeroes on the so-called â€œOperation Chokepointâ€œ, an infamous plot by certain government agencies that â€œpressured banks to cut off access to financial services to disfavored (but not unlawful) sectors of the economy.â€ The OCC, which itself was not part of the plot, argues that the now exposed and discredited operation cannot be the basis for denial of access to financial services.
In a Twitter thread, Santori states that â€œin its early days, bitcoin was caught up in Operation Chokepoint, and crypto more broadly is still caught up today.â€ The CLO then gives one reason why it has been necessary for the â€œgovernment to get to tell a private bank who it must and must not serve.â€
Santori says he is hopeful that â€œDemocrats and other left leanersâ€ will not object to the changes.
What do you think of the OCCâ€™s proposal? Share your thoughts in the comments section below.