This comment responds to the OCC’s “Proposed Rule [to] Ensure Fair Access to Bank Services, Capital, and Credit”

Comptroller Brooks:

Woodstock Institute requests that the Office of the Comptroller of the Currency (OCC) withdraw its proposed “Fair Access to Financial Services” proposal. This proposed rule inserts the government in countering free market forces, ignores the financial industry’s evolution of risk mitigation, and has a narrow definition of “fair” with respect to the impact that such a rule would have on broader society.

Enterprise-wide risk management has evolved significantly over the past 30 years and has expanded beyond merely assessing a borrower’s ability to repay a loan. Decades before the concept of Environment, Social and Governance (ESG) was formalized, financial institutions were aware that social issues and emerging social forces were a critical part of the industry and do, in fact, have a direct impact on shareholder value. 

For example, in the early 1990s, Nike was found to be running its overseas operations in a manner that did not violate US laws or regulations but violated our expectations of how American companies should operate. This cost Nike an enormous amount of revenue and lost reputation (including a public “Just Don’t Do It” campaign by many University sport teams). Banks took notice of the financial cost incurred by Nike’s actions and began to ask more questions of clients about their practices (domestic and international) and to keep tabs on societal expectations as they relate to market trends that may shift away from certain companies and industries and, as a result, bring into question the long-term financial sustainability of a client. More recently, and as a result of their role in financing the Dakota Access Pipeline, Wells Fargo, MUFG Union Bank, and others saw a number of their clients depart including, but not limited to municipalities, states and a number of large commercial entities. 

The trend of connecting business activities tied to socio-economic and environmental risk with their source of financing has accelerated in recent years. Many governments have passed laws making financiers liable for losses associated with catastrophes caused by a combination of client misbehavior and a lack of appropriate oversight by the bank. Additionally, the rapid availability of information to the media and investors makes it difficult to justify loans in sensitive industries. 

Lending to a weapons-related client that arms a dictator in repressing their population, while profitable, poses a substantial risk to a bank and its shareholders. Similarly, having a client that chooses not to modify practices when its product is used to slaughter children in schools or to strip wealth from Black and Brown communities poses similar financial risk to the client’s bank. The international movement towards quantifying the costs associated with climate change (the Task Force on Climate-related Financial Disclosure) exists for the purpose of allowing the financial industry and its investors to quantify and mitigate the financial risks associated with climate change. The bottom line is that experience shows that some industries and activities  are too risky to finance. 

We urge the OCC to take heed of the market in this area. The American financial system will be at a competitive disadvantage if they are forced by their government to finance activities that violate international standards or mandates by other developed countries and, as a result, are locked out of those markets.It is unusual for Woodstock to find itself in agreement with the American Bankers Association, Consumer Bankers Association and the Financial Services Forum on issues relating to socio-economic and environmental risk. This uncommon alignment speaks to the problems with this proposal. We urge the OCC to withdraw this proposal in its entirety.


Horacio F Mendez, President & CEO
Woodstock Institute