“Bad for Business and Bad for Public Safety:” Brady Calls on Office of the Comptroller of Currency to Withdraw Proposed Lending Rule

Washington, D.C., January 8, 2021 - Brady has submitted comments to the Office of the Comptroller of the Currency of the U.S. Treasury Department opposing a proposed rule, “Fair Access to Financial Services.” The proposed rule, misleadingly named to imply that the same rules that prevent discrimination against individuals in protected clases should also apply to entire industries, is intended to remove discretion from lenders to make credit decisions and force them to do business with industries that they do not want to associate with. Brady warns that such a rule would open the door to forcing lenders to work with firearm businesses with unsafe sales and distribution practices, removing a vital and market-based pressure on the firearms industry to adopt reasonable, life-saving business practices that will make our nation safer.

Brady President Kris Brown shared:

“This proposed rule is purposefully targeted to tie the hands of lending institutions and force them to do business with industries that put the safety of Americans at risk. By forcing lending institutions to disregard reputational risk of doing business with such industries, the OCC undermines its core mission of working with banks and lenders to best manage the lending environment and operate as a partner to the financial services industry. This is a ploy by the outgoing administration to use the levers of power to benefit industries that have supported the President over the past four years.

The gun industry already enjoys unprecedented legal protections that disincentivize safe business practices. Against this backdrop private businesses, including many banks, have stepped up to increase public safety protections by these businesses. Some lenders require gun industry clients to adhere to specific safety requirements for transferring firearms, while others conduct enhanced due diligence to ensure legal compliance and a safe distribution chain. Some choose not to assume the risk of conducting business with the gun industry at all. It is critically important that banks retain their independence to make these decisions for themselves. Forcing banks and lenders to conduct business with industries that they are not comfortable supporting is both bad for business and bad for public safety. Brady calls on the Office of the Comptroller of Currency to reject or withdraw this proposed rule.“

About the “Fair Access to Financial Services Rule:”

The proposed “Fair Access to Financial Services Rule” would prevent lenders from categorically declining to finance specific industries or types of projects, thereby removing the ability of banks to weigh reputational risk when considering which industries or businesses with which to do business. This rule would be ahistorical, the OCC itself broadened the definition of risk in 1996 to include reputational concerns, and will harm the banking industry by forcing lenders to make credit decisions without considering important factors like reputational harm from organizations engaged in risky or unsafe business practices. Lenders have limited and even ceased doing business with certain industries, including in many cases the firearm industry, as a result of reputation concerns. This is a clear and market-driven pressure from lending institutions on our nation’s economy, helping to incentivize business practices that reflect the best interests and desires of the American people.

The OCC also claims that Dodd-Frank mandates “fair access to financial services, and fair treatment of customers by the institutions and other persons subject to its jurisdiction.”The fair access provisions apply to protected classes seeking to do business with a particular lender. Yet even under a broad application, it is many steps too far to read Dodd-Frank’s fair-access provisions to protect entire industries.

About Financial Services and the Firearm Industry:

The firearm industry enjoys special legal protections that allow its members to avoid accountability and responsibility for unsafe business practices. Over the years, banks have become increasingly aware of their own responsibilities to protect the public safety and the reputational and liability risks of conducting business with firearm manufacturers that refuse to adopt common sense, safe firearm distribution practices. When overwhelming majorities of Americans have a clear desire for greater and more strenuous gun safety laws and policies, lenders have correctly assessed that conducting business with industries and businesses whose practices defy that public consensus constitutes a reputational risk. Given this systemic, reputational risk to lenders, the OCC should support banks in ensuring that firearm safety efforts continue to reflect the desires of the American people and helping them to manage risk, rather than contradicting the Office’s core mandate.

About the Private Sector’s Role in Preventing Gun Violence:

The private sector is a needed and decisive partner in reducing gun violence in the United States. Brady’s 2018 report, “The Private Sector’s Role in Reducing Gun Violence,” outlines how corporate America, from firearm dealers, to retailers, to financial firms, to banks and lending institutions, create strong market pressures and incentives for all members of the firearms industry and supply chain to uphold the strictest standards for gun safety and reduce the flow of illegal weapons into communities. From Brady's Gun Dealer Code of Conduct to asking state and local officials to examine and adopt a Supply Side Approach to stop the flow of crime guns into impacted communities, the private sector can in numerous instances play a critical part in protecting Americans from gun violence. Among these partners, banks and lending institutions can, should, and do limit lending to businesses whose practices are unsafe.