On January 14, the Office of the Comptroller of the Currency (OCC) finalized an NRA-supported rule to end politically-motivated discrimination in the provision of financial services. The new regulation is now set to take effect on April 1.
As we reported last month, the rule follows a long pattern of banks refusing or curtailing service to lawful industries that have been targeted by political activists in and outside of the government. These have included businesses in the firearm and ammunition sectors.
Banks have tried to justify these actions against viable, financially-sound customers on the basis of “reputation risk.” That is, even though the customers’ own financial houses are in good order, the bank insists it could suffer possible adverse consequences by transacting with them from angering those who oppose the customer’s products or activities.
Taken to its logical extreme, however, this means that the only businesses allowed to operate in the private sector would be those deemed acceptable by the social grievance lobby, which continually expands its targets and its demands. This small, vocal minority – whose members disproportionately come from elites in technology, media, entertainment, and academia – does not necessarily represent the will of the free market generally or of the body politic.
Nearly 7,000 comments were submitted in response to the rulemaking, including many by financially-sound firearm-related businesses that nevertheless have had difficulty finding or maintaining banking relationships.
The NRA submitted its own comment to the rulemaking, noting, “Some of the most shameful episodes in our nation’s history have arisen from the systematic exclusion of certain American citizens from participation in the financial markets.” It wasn’t just the ends sought by these tactics that were illegitimate and immoral, the comment argued, but the tactics themselves.
The NRA’s comment also detailed how Second Amendment related businesses were specifically targeted by the Obama/Biden administration under Operation Choke Point, a government program that pressured banks to drop or curtail businesses with disfavored industries.
Once that wrongdoing was brought to light and discontinued, however, private activists put their own pressure on banks, insisting that they drop gun-related businesses or establish “best practices” for gun industry customers that mirror the terms of longstanding but unsuccessful gun control proposals.
The comment additionally made the point that the handful of large national banks that would be affected by the rule enjoy considerable government subsidies and protections that limit the ability of new competitors to enter the market and challenge the dominance of the existing banks. These included, of course, massive taxpayer-funded bailouts following the financial crisis of 2008.
The NRA’s comment further explained that activists would not lose their voices under the rule and could continue to advocate for whatever positions they support through other means, including through the legislatures and courts, which feature more deliberative and constitutionally-answerable procedures.
The finalized rule keeps intact the provisions most relevant to discrimination against Second Amendment related companies. In particular, it would require covered banks to provide fair access to all the products they offer to law-abiding customers who are able to satisfy predetermined “quantitative, impartial risk-based standards.” It would also prohibit the banks from coordinating with others to “deny … any person a financial service the covered bank offers.”
The new rule comes at a time when a variety of private institutions are making sweeping decisions to limit transactions with industries or even lone individuals that have incurred the wrath of political activists.
The OCC rulemaking draws a hard line at the use of financial exile as a political maneuver. Any American who believes in the basic principles of fairness and non-discrimination should welcome it.
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