US banks want to continue to choose whether to lend money to the oil and gas industry according to risk and reputation management practices, not to ask a regulator to move forward with a new rule that allows them to deal with such companies Can force.
The Office of the Comptroller of the Currency (OCC) has recently proposed a new rule to ensure the so-called proper access to financial services for the purpose of finalizing a rule.
The proposal made several comments during the 45-day comment period ended on Monday, including the Bank Policy Institute (BPI) —a non-partisan public policy, research and advocacy group representing the country’s leading banks. . The BPI this week called on the OCC to withdraw its “fair access” proposal, which, the banks say, would “microcosmize banks’ business decisions in an unprecedented way.”
According to the banks, the new rule would “prohibit banks from using subjective judgment and qualitative considerations, including reputational risk, in deciding whether providing financial services is wholly inconsistent, as the OCC has historically held How banks make risk management decisions. “
For example, banks have become increasingly aware of the prestigious results of lending to oil and gas projects in sensitive areas such as the Arctic.
In the United States, Goldman Sachs said in December 2019 that it would reduce the exploration and production of new Arctic oil and to finance new thermal coal mine development or strip mining. Wells Fargo, JP Morgan and Deutsche Bank have also said they will stop financing new oil and gas projects in the Arctic.
In its comments on the proposed rule, Wall Street banks stated that the proposal’s “approach to promoting fair access is impractical, unreliable and inconsistent with safe and sound banking practices.”
“We are considering the comments of all stakeholders, as we formulate a final rule,” Brian Hubbard, an OCC spokesman, told Bloomberg.
By Tsvetana Paraskova for oilprice.com
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