Fair Access to Financial Services, 75261-75266 [2020-26067]

Agencies

• Office of the Comptroller of the Currency
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 85, Number 228 (Wednesday, November 25, 2020)]
[Proposed Rules]
[Pages 75261-75266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-26067]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 55

[Docket ID OCC-2020-0042]
RIN 1557-AF05


Fair Access to Financial Services

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Office of the Comptroller of the Currency is proposing a 
regulation to ensure that national banks and Federal savings 
associations offer and provide fair access to financial services.

DATES: Comments must be received on or before January 4, 2021.

ADDRESSES: Commenters are encouraged to submit comments through the 
Federal eRulemaking Portal, if possible. Please use the title ``Fair 
Access to Financial

[[Page 75262]]

Services'' to facilitate the organization and distribution of the 
comments. You may submit comments by any of the following methods:
     Federal eRulemaking Portal--Regulations.gov Classic or 
Regulations.gov Beta.
    Regulations.gov Classic: Go to https://www.regulations.gov/. Enter 
``Docket ID OCC-2020-0042'' in the Search Box and click ``Search.'' 
Click on ``Comment Now'' to submit public comments. For help with 
submitting effective comments, please click on ``View Commenter's 
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to get information on using Regulations.gov, including instructions for 
submitting public comments.
    Regulations.gov Beta: Go to https://beta.regulations.gov/ or click 
``Visit New Regulations.gov Site'' from the Regulations.gov classic 
homepage. Enter ``Docket ID OCC-2020-0042'' in the Search Box and click 
``Search.'' Public comments can be submitted (1) via the ``Comment'' 
box located below the displayed document information or (2) by clicking 
on the document title and then clicking on the ``Comment'' box on the 
top-left side of the screen. For help with submitting effective 
comments, please click on ``Commenter's Checklist.'' For assistance 
with the Regulations.gov Beta site, please call (877) 378-5457 (toll 
free) or (703) 454-9859 Monday-Friday, 9 a.m.-5 p.m. ET. or email 
[email protected].
     Mail: Chief Counsel's Office, Attention: Comment 
Processing, Office of the Comptroller of the Currency, 400 7th Street 
SW, Suite 3E-218, Washington, DC 20219.
     Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218, 
Washington, DC 20219.
    Instructions: You must include ``OCC'' as the agency name and 
``Docket ID OCC-2020-0042'' in your comment. In general, the OCC will 
enter all comments received into the docket and publish the comments on 
the Regulations.gov website without change, including any business or 
personal information provided such as name and address information, 
email addresses, and phone numbers. Comments, including attachments and 
other supporting materials, are part of the public record and subject 
to public disclosure. Do not include any information in your comment or 
supporting materials that you consider confidential or inappropriate 
for public disclosure.
    You may review comments and other related materials that pertain to 
this rulemaking action through Regulations.gov Classic or 
Regulations.gov Beta.
    Regulations.gov Classic: Go to https://www.regulations.gov/. Enter 
``Docket ID OCC-2020-0042'' in the Search box and click ``Search.'' 
Click on ``Open Docket Folder'' on the right side of the screen. 
Comments and supporting materials can be viewed and filtered by 
clicking on ``View all documents and comments in this docket'' and then 
using the filtering tools on the left side of the screen. Click on the 
``Help'' tab on the Regulations.gov home page to get information on 
using Regulations.gov. The docket may be viewed after the close of the 
comment period in the same manner as during the comment period.
    Regulations.gov Beta: Go to https://beta.regulations.gov/ or click 
``Visit New Regulations.gov Site'' from the Regulations.gov classic 
homepage. Enter ``Docket ID OCC 2020-0042'' in the Search Box and click 
``Search.'' Click on the ``Comments'' tab. Comments can be viewed and 
filtered by clicking on the ``Sort By'' drop-down on the right side of 
the screen or the ``Refine Results'' options on the left side of the 
screen. Supporting materials can be viewed by clicking on the 
``Documents'' tab and filtered by clicking on the ``Sort By'' drop-down 
on the right side of the screen or the ``Refine Results'' options on 
the left side of the screen. For assistance with the Regulations.gov 
Beta site, please call (877) 378-5457 (toll free) or (703) 454-9859 
Monday-Friday, 9 a.m.-5 p.m. ET or email 
[email protected]. The docket may be viewed after the 
close of the comment period in the same manner as during the comment 
period.

FOR FURTHER INFORMATION CONTACT: Karen McSweeney, Special Counsel, or 
Emily Boyes, Counsel, Chief Counsel's Office, (202) 649-5490, Office of 
the Comptroller of the Currency, 400 7th Street SW, Washington, DC 
20219.

SUPPLEMENTARY INFORMATION: 

I. Introduction

    Title III of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act) included a revised statement of the 
mission of the Office of the Comptroller of the Currency (OCC or 
agency).\1\ Codified at 12 U.S.C. 1, it charged the OCC with assuring 
the safety and soundness of, and compliance with laws and regulations, 
fair access to financial services, and fair treatment of customers by, 
the institutions and other persons subject to its jurisdiction. Title 
III also enhanced the supervision of national banks and Federal savings 
associations and transferred primary supervisory and regulatory 
authority for Federal savings associations to the OCC. In addition, 
Title III reaffirmed the agency's authority to establish regulations 
governing the operations of national banks and granted additional 
authority to do the same for Federal savings associations.
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    \1\ Public Law 111-203, 124 Stat. 1376, 1520-1528 (July 21, 
2010).
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    In one respect, the Dodd-Frank Act's amendments to 12 U.S.C. 1 
recognized a broad and longstanding anti-discrimination principle that 
individuals are entitled to be treated fairly by national banks and 
Federal savings associations (banks). That principle is reinforced by 
specific laws such as the Equal Credit Opportunity Act, Fair Housing 
Act, and Community Reinvestment Act, among others. In another respect, 
the Dodd-Frank Act's articulation of ``fair access'' as a distinct 
concept implies a right of individual bank customers, whether natural 
persons or organizations, to have access to financial services based on 
their individual characteristics and not on their membership in a 
particular category of customers.\2\
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    \2\ For purposes of this rulemaking, the term financial services 
includes financial products and services.
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    Consistent with the Dodd-Frank Act's mandate of fair access to 
financial services and since at least 2014, the OCC has repeatedly 
stated that while banks are not obligated to offer any particular 
financial service to their customers, they must make the services they 
do offer available to all customers except to the extent that risk 
factors particular to an individual customer dictate otherwise. As the 
OCC's then-Comptroller stated in a 2014 speech:

    No matter what type of business you are dealing with, you have 
to exercise some sound judgment, conduct your due diligence, and 
evaluate customers individually. Even in areas that traditionally 
have been viewed as inherently risky, you should be able to 
appropriately manage the risk. This is basic risk management, and 
that's a business that the institutions we at the OCC supervise 
excel at. You shouldn't feel that you can't bank a customer just 
because they fall into a category that on its face appears to carry 
an elevated level of risk. Higher-risk categories of customers call 
for stronger risk management and controls, not a strategy of total 
avoidance. Obviously, if the risk posed by a business or an 
individual is too great to be managed successfully, then you have to 
turn that customer away. But you should only make those decisions 
after appropriate due diligence.\3\
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    \3\ Remarks by Thomas J. Curry, Comptroller of the Currency, 
before the Association of Certified Anti-Money Laundering 
Specialists (Mar. 17, 2014), available at https://occ.gov/news-issuances/speeches/2014/pub-speech-2014-39.pdf.


[[Page 75263]]


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    This principle of individual, rather than category-based, customer 
risk evaluation has since been reinforced in numerous OCC reports, the 
testimony of OCC officials, and other agency releases.\4\
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    \4\ See, e.g., OCC Bulletin 2014-58, ``Banking Money Services 
Businesses: Statement on Risk Management'' (Nov. 19, 2014); OCC 2015 
Annual Report, available at https://www.occ.gov/publications-and-resources/publications/annual-report/files/2015-annual-report.pdf; 
Testimony of Daniel P. Stipano, Deputy Chief Counsel, OCC (July 15, 
2014) (Stipano Testimony), before the U.S. House of Representatives, 
Subcommittee on Oversight and Investigations, available at https://occ.gov/news-issuances/congressional-testimony/2014/pub-test-2014-101-written.pdf; OCC Spring 2015 Semiannual Risk Perspective From 
the National Risk Committee, available at https://www.occ.gov/publications-and-resources/publications/semiannual-risk-perspective/files/pub-semiannual-risk-perspective-spring-2015.pdf; Remarks by 
Thomas J. Curry, Comptroller of the Currency, before the Association 
of Certified Anti-Money Laundering Specialists 15th Annual Anti-
Money Laundering and Financial Crime Conference (Sept. 28, 2016), 
available at https://www.occ.gov/news-issuances/speeches/2016/pub-speech-2016-117.pdf; and GAO Report 20-46, ``Bank Secrecy Act, 
Examiners Need More Information on How to Assess Banks' Compliance 
Controls for Money Transmitter Accounts'' (Dec. 2019).
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    On at least two occasions, the OCC has issued guidance to 
specifically address reports of banks refusing to provide access to 
financial services to entire industry categories engaged in lawful 
business activities without regard to the risk factors of the 
individual customers in these industry categories. In 2014, amid 
reports of banks refusing to provide financial services to the entire 
category of money services businesses (MSBs), the OCC issued a 
clarification of its supervisory expectations with regard to banks 
offering financial services to MSBs.\5\ The guidance emphasized that 
banks should not ``engage in the termination of entire categories of 
customers'' and stated that ``banks are expected to assess the risks 
posed by an individual MSB customer on a case-by-case basis and to 
implement controls to manage the relationship commensurate with the 
risk associated with each customer.'' \6\
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    \5\ OCC Bulletin 2014-58, ``Banking Money Services Businesses: 
Statement on Risk Management'' (Nov. 19, 2014).
    \6\ Id. (emphasis added); see also Stipano Testimony.
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    In 2016, the OCC addressed a similar issue in the context of 
foreign correspondent banking. In guidance issued that year, the OCC 
made clear that refusing to service the entire category of foreign 
correspondent banking was inconsistent with supervisory expectations 
and that banks must decide whether to serve individual firms ``based on 
analysis of the risks presented by individual foreign financial 
institutions and the bank's ability to manage those risks.'' \7\
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    \7\ OCC Bulletin 2016-32, ``Risk Management Guidance on Foreign 
Correspondent Banking: Risk Management Guidance on Periodic Risk 
Reevaluation of Foreign Correspondent Banking'' (Oct. 5, 2016) 
(emphasis added), available at https://www.occ.gov/news-issuances/bulletins/2016/bulletin-2016-32.html; see also News Release 2016-
123, ``OCC Releases Risk Reevaluation Guidance for Foreign 
Correspondent Banking'' (Oct. 5, 2016).
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    Despite the OCC's statements and guidance over the years about the 
importance of assessing and managing risk on an individual customer 
basis, some banks continue to employ category-based risk evaluations to 
deny customers access to financial services. This happens even when an 
individual customer would qualify for the financial service if 
evaluated under an objective, quantifiable risk-based analysis. These 
banks are often reacting to pressure from advocates from across the 
political spectrum whose policy objectives are served when banks deny 
certain categories of customers access to financial services.
    The pressure on banks has come from both the for-profit and 
nonprofit sectors of the economy and targeted a wide and varied range 
of individuals, companies, organizations, and industries. For example, 
there have been calls for boycotts of banks that support certain health 
care and social service providers, including family planning 
organizations, and some banks have reportedly denied financial services 
to customers in these industries.\8\ Some banks have reportedly ceased 
to provide financial services to owners of privately owned correctional 
facilities that operate under contracts with the Federal Government and 
various state governments.\9\ Makers of shotguns and hunting rifles 
have reportedly been debanked in recent years.\10\ Independent, nonbank 
automated teller machine operators that provide access to cash 
settlement and other operational accounts, particularly in low-income 
communities and thinly-populated rural areas, have been affected.\11\ 
Globally, there have been calls to de-bank large farming operations and 
other agricultural business.\12\ And companies that operate in 
industries important to local economies and the national economy have 
been cut off from access to financial services, including those that 
operate in sectors of the nation's infrastructure ``so vital to the 
United States that their incapacitation or destruction would have a 
debilitating effect on security, national economic security, national 
public health or safety, or any combination thereof.'' \13\
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    \8\ American Banker, ``BankThink JPMorgan, Condoms and the 
Problem of Reputational Risk'' (Mar. 26, 2014); Bloomberg 
Businessweek, ``The Most Difficult Business You Could Run: Why It's 
So Hard to Run an Abortion Clinic'' (Feb. 24, 2016); Association of 
Mature Citizens, ``You May Not Support Planned Parenthood . . . But 
Your Favorite Companies Do'' (Oct. 12, 2017).
    \9\ Reuters, ``JPMorgan backs away from private prison finance'' 
(Mar. 5, 2019); Forbes Magazine, ``GEO Group Running Out of Banks as 
100% of Known Banking Partners Say `No' to the Private Prison 
Sector'' (Sept. 30, 2019).
    \10\ American Banker, ``Florida gun maker told to find new bank, 
CEO claims'' (Oct. 09, 2018); New York Times, ``Citigroup Sets 
Restrictions on Gun Sales by Business Partners'' (Mar. 22, 2018); 
New York Times, ``How Banks Could Control Gun Sales if Washington 
Won't'' (Feb. 19, 2018).
    \11\ Letter dated November 11, 2020, from Rep. Rose (R-TN) et 
al. to Acting Comptroller B. Brooks, OCC; Vice Chair of Supervision 
R. Quarles et al., Board of Governors of the Federal Reserve System 
(Federal Reserve); and Chair J. McWilliams, Federal Deposit 
Insurance Corporation (FDIC).
    \12\ See, e.g., Plant Based News, ``Banks Facing Calls To `Stop 
Funding Factory Farming' To Protect Animals, The Planet, And Public 
Health'' (Nov. 10, 2020), available at https://plantbasednews.org/news/environment/banks-told-stop-funding-factory-farming; 
Change.org, ``Development banks: Stop investing in industrial animal 
agriculture,'' available at https://www.change.org/p/world-bank-development-banks-stop-investing-in-industrial-animal-agriculture.
    \13\ See Letter dated June 16, 2020, from Sen. Sullivan (R-AK), 
Sen. Murkowski (R-AK), and Rep. Young (R-AK) to Acting Comptroller 
B. Brooks, OCC; Chair J. Powell et al., Federal Reserve; and Chair 
J. McWilliams, FDI; see also U.S. Department of Homeland Security, 
Cybersecurity & Infrastructure Security Agency, ``Critical 
Infrastructure Sectors,'' available at https://www.cisa.gov/critical-infrastructure-sectors; Presidential Policy Directive 21 
(PPD-21), ``Critical Infrastructure Security and Resilience'' (Feb. 
12, 2013).
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    It is our understanding that some banks have taken these actions 
based on criteria unrelated to safe and sound banking practices, 
including (1) personal beliefs and opinions on matters of substantive 
policy that are more appropriately the purview of state and Federal 
legislatures; (2) assessments ungrounded in quantitative, risk-based 
analysis; and (3) assessments premised on assumptions about future 
legal or political changes. In some cases, banks appear to have denied 
persons access to financial services without even attempting to price 
the financial services to reflect the perceived risk. Particularly in 
light of the now-discredited Operation Choke Point, in which certain 
government agencies (but not the OCC) were revealed to have pressured 
banks to cut off access to financial services to disfavored (but not 
unlawful) sectors of the economy, the OCC believes these criteria are 
not, and cannot serve as, a legitimate basis for refusing to grant a 
person or entity access to financial services. Bank actions based on 
these criteria are inconsistent with a bank's legal

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responsibility to provide fair access to financial services.
    In June 2020, the Alaska Congressional delegation sent a letter to 
the OCC discussing decisions by several of the nation's largest banks 
to stop lending to new oil and gas projects in the Arctic.\14\ The 
letter noted the critical importance of the energy sector to the U.S. 
economy, as well as the jobs, state revenue, and diplomatic and 
national security benefits attributable to the oil and gas industries 
targeted by the banks' actions.\15\ In the letter, the authors 
described as unfair the effects of this decreased lending on Alaska 
Native communities on the state's North Slope, as well as on the 
population of the state as a whole. The letter also stated that, 
although the authors believed that the banks' rationale was political 
in nature, the banks had ostensibly relied on claims of reputation risk 
to justify their decisions.
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    \14\ See Letter dated June 16, 2020, from Sen. Sullivan (R-AK), 
Sen. Murkowski (R-AK), and Rep. Young (R-AK) to Acting Comptroller 
B. Brooks, OCC; Chair J. Powell et al., Federal Reserve; and Chair 
J. McWilliams, FDIC.
    \15\ The energy sector (which includes the interrelated segments 
of electricity, oil, and natural gas) is one of the nation's 16 
critical infrastructure sectors. See U.S. Department of Homeland 
Security, Cybersecurity & Infrastructure Security Agency, ``Critical 
Infrastructure Sectors,'' Energy Sector, available at https://www.cisa.gov/energy-sector (``The U.S. energy infrastructure fuels 
the economy of the 21st century. Without a stable energy supply, 
health and welfare are threatened, and the U.S. economy cannot 
function. [PPD-21] identifies the Energy Sector as uniquely critical 
because it provides an `enabling function' across all critical 
infrastructure sectors. More than 80 percent of the country's energy 
infrastructure is owned by the private sector, supplying fuels to 
the transportation industry, electricity to households and 
businesses, and other sources of energy that are integral to growth 
and production across the nation.'').
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    In response to this letter, the OCC requested information from 
several large banks to better understand their decisionmaking. The 
responses received indicate that, over the course of 2019 and 2020, 
these banks had decided to cease providing financial services to one or 
more major energy industry categories, including coal mining, coal-
fired electricity generation, and/or oil exploration in the Arctic 
region. The terminated services were not limited to lending, where risk 
factors might justify not serving a particular client (e.g., when a 
bank lacked the expertise to evaluate the collateral value of mineral 
rights in a particular region or because of a bank's concern about 
commodity price volatility). Instead, certain banks indicated that they 
were also terminating advisory and other services that are unconnected 
to credit or operational risk. In several instances, the banks 
indicated that they intend only to make exceptions when benchmarks 
unrelated to financial risk are met, such as whether the country in 
which a project is located has committed to international climate 
agreements and whether the project controls carbon emissions 
sufficiently.
    Neither the OCC nor banks are well-equipped to balance risks 
unrelated to financial exposures and the operations required to deliver 
financial services. For example, climate change is a real risk, but so 
is the risk of foreign wars caused in part by U.S. energy dependence 
and the risk of blackouts caused by energy shortages. Furthermore, 
balancing these risks is the purview of Congress and Federal energy and 
environmental regulators. It is one thing for a bank not to lend to oil 
companies because it lacks the expertise to value or manage the 
associated collateral rights; it is another for a bank to make that 
decision because it believes the United States should abide by the 
standards set in an international climate treaty. Organizations 
involved in politically controversial but lawful businesses--whether 
family planning organizations, energy companies, or otherwise--are 
entitled to fair access to financial services under the law. In order 
to ensure that banks provide customers with fair access to financial 
services, and consistent with longstanding OCC policy, a bank's 
decision not to serve a particular customer must be based on an 
individual risk management decision about that individual customer, not 
on the fact that the customer operates in an industry subject to a 
broad categorical exclusion created by the bank.\16\
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    \16\ Other Federal agencies have taken similar actions to ensure 
that private institutions do not use their market position to make 
public policy. See e.g., News Release, U.S. Department of Labor 
Announces Final Rule To Protect Americans' Retirement Investments 
(Oct. 30, 2020) available at https://www.dol.gov/newsroom/releases/ebsa/ebsa20201030, discussing U.S. Department of Labor Final Rule, 
``Financial Factors in Selecting Plan Investments,'' 85 FR 72846 
(Nov. 13, 2020).
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    While all banks have the responsibility to provide fair access to 
financial services, it is particularly important that the nation's 
largest banks fulfill this obligation. Large banks exercise sufficient 
market power to influence the price of financial services, and only the 
largest banks have the diversified balance sheets and sophisticated 
risk management systems to serve certain industries. It is also fair to 
place particular responsibilities on the largest banks because their 
systemic importance often results in their receiving assistance and 
favorable treatment from the government during periods of financial 
distress. In addition, these banks have positioned themselves to 
provide services to all sectors of the economy by virtue of the scale 
and breadth of their technical expertise. In contrast, smaller banks 
generally are not in a position to influence the price of services, are 
not systemically significant, may lack comprehensive technical 
expertise across the full range of banking services, and have limited 
capacity to bear overhead costs (e.g., salaries of loan officers and 
industry-specific subject-matter experts and the cost of maintaining 
extensive physical offices and branch locations)--all of which limit 
the number of sectors of the economy they can serve.
    The dominant market position of the large bank population is clear 
when all OCC-regulated institutions with assets of $100 billion or more 
are considered. Together, these banks account for approximately 55 
percent of the total assets and deposits of all U.S. banks and hold 
approximately 50 percent of the dollar value of outstanding loans and 
leases in the United States.\17\ In light of this market position, a 
decision by one or more of these banks not to provide a person with 
fair access to financial services could have a significant effect on 
that person, the nation's financial and economic systems, and the 
global economy. This effect is all the more likely if the financial 
service at issue is not available on reasonable terms elsewhere.
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    \17\ Reports of Condition and Income, June 30, 2020.
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    To address the concerns identified above, the OCC is proposing a 
regulation to clarify (1) the obligation of large banks to provide fair 
access to financial services, consistent with the Dodd-Frank Act's 
mandate \18\ and (2) the parameters of this requirement. Unlike prior 
articulations of the fair access principle discussed above, this OCC 
action would have the force and effect of law and enable the agency to 
take supervisory or enforcement action, when appropriate.\19\
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    \18\ As previously noted, the OCC's responsibility to ensure 
that banks provide fair access to financial services originated with 
the Dodd-Frank Act. The OCC has the responsibility to interpret this 
ambiguous language and provide the necessary clarity for the banks 
it supervises. See Chevron U.S.A., Inc. v. Nat. Res. Def. Council, 
Inc., 467 U.S. 837, 843 (1984) (``[I]f the statute is silent or 
ambiguous with respect to the specific issue, the question for the 
court is whether the agency's answer is based on a permissible 
construction of the statute.''); see also 12 U.S.C. 93a (authorizing 
the OCC to prescribe rules and regulations to carry out the 
responsibilities of the office). This proposal is not intended to 
affect in any way the applicability of antitrust laws to any bank 
action, including any unlawful anticompetitive agreement. See, e.g., 
15 U.S.C. 1 et seq.
    \19\ See Notice of Proposed Rulemaking: ``Role of Supervisory 
Guidance,'' 85 FR 70512 (Nov. 5, 2020) for a discussion of the 
difference between agency guidance and regulations.

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[[Page 75265]]

II. Description of the Proposal

    The proposed rule would create a new part 55 to address fair access 
to financial services, drawing both on principles of long-established 
antitrust law and on the OCC guidance and other statements referenced 
above. It would apply to any ``covered bank,'' which is defined in 
proposed Sec.  55.1(a)(1)(i) as an entity for which the OCC is the 
appropriate Federal banking agency under 12 U.S.C. 1813(q)(1) that has 
the ability to (1) raise the price a person has to pay to obtain an 
offered financial service from the bank or from a competitor or (2) 
significantly impede a person, or a person's business activities, in 
favor of or to the advantage of another person. Under proposed Sec.  
55.1(a)(1)(ii), a bank would be presumed not to meet the definition of 
covered bank if it has less than $100 billion in total assets.\20\ 
Under proposed Sec.  55.1(a)(1)(iii), however, a bank is presumed to 
meet the definition of covered bank if it has $100 billion. A bank that 
meets the criteria in paragraph (a)(1)(iii) can seek to rebut the 
presumption that it is a covered bank under this rule by submitting to 
the OCC written materials that, in the agency's judgment, demonstrate 
the bank does not meet the definition of a covered bank.
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    \20\ The $100 billion threshold is a commonly used threshold for 
large banks. See, e.g., Changes to Applicability Thresholds for 
Regulatory Capital and Liquidity Requirements, 84 FR 59230 (Nov. 1, 
2019) (establishing risk-based categories for determining 
applicability under the agencies' regulatory capital rule and 
liquidity coverage ratio rule and stating that the ``rule seeks to 
better align the regulatory requirements for large banking 
organizations with their risk profiles, taking into account the size 
and complexity of these banking organizations as well as their 
potential systemic risks. The final rule is consistent with 
considerations and factors set forth under section 165 of the [Dodd-
Frank Act], as amended by the Economic Growth, Regulatory Relief, 
and Consumer Protection Act'' (citations omitted)).
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    In addition to the proposed $100 billion asset threshold, the OCC 
contemplated including a separate threshold, linked to national market 
share of any financial service, as an alternative for a bank to be 
presumed to meet the definition of a covered bank. A national market 
share threshold would recognize that some banks have less significant 
on-balance sheet assets but nonetheless have a market position that 
provides them with the ability to (1) raise the price a person has to 
pay to obtain a financial service offered by the bank from the bank or 
from a competitor or (2) significantly impede a person, or a person's 
business activities, in favor of or to the advantage of another person. 
The OCC invites public comment on whether the agency should include a 
percent of national market share threshold as another reason for a bank 
to be presumed to meet the definition of covered bank and, if so, 
whether a 10 percent, 20 percent, or other percent of the national 
market share would be the appropriate threshold. The OCC also invites 
public comment on whether a presumption different than the $100 billion 
asset threshold presumption proposed in Sec.  55.1(a)(1)(ii) and (iii) 
would be more effective to capture banks that meet the definition of 
covered bank in Sec.  55.1(a)(1)(i) and to exclude banks that do not 
meet these standards.
    Section 55.1(a)(2) would define ``financial service'' to mean a 
financial product or service. Section 55.1(a)(3) would define 
``person'' to mean any natural person or any partnership, corporation, 
or other business or legal entity.
    For a covered bank's board and its management to carry out their 
core risk management responsibilities, the rule would require that a 
covered bank provide fair access to its financial services with 
relevant risks quantified and managed, including through pricing, as 
needed. The covered bank's board and management would ultimately be 
responsible for ensuring that the bank's operations are consistent with 
its obligation to provide fair access to financial services, including 
through established written policies and procedures. Upon review of a 
covered bank's operations, including its written policies and 
procedures, it should be clear whether the bank is providing persons 
access to financial services based on quantitative, impartial risk-
based standards or on a basis that is not tied to individual risk 
assessment and risk management.
    Specifically, proposed Sec.  55.1(b) states that to provide fair 
access to financial services, a covered bank shall (1) make each 
financial service it offers available to all persons in the geographic 
market served by the covered bank on proportionally equal terms; \21\ 
(2) not deny any person a financial service the bank offers except to 
the extent justified by such person's quantified and documented failure 
to meet quantitative, risk-based standards established in advance by 
the covered bank; (3) not deny any person a financial service the bank 
offers when the effect of the denial is to prevent, limit, or otherwise 
disadvantage the person from entering or competing in a market or 
business segment or in such a way that benefits another person or 
business activity in which the covered bank has a financial interest; 
and (4) not deny, in coordination with others, any person a financial 
service the covered bank offers.
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    \21\ Providing financial services on proportionally equal terms 
includes, at a minimum, ensuring that pricing and denial decisions 
are commensurate with measurable risks based on quantitative and 
qualitative characteristics. Additionally, this provision would 
prohibit a bank from engaging in geography-based redlining, for 
example, by refusing to provide financial services to customers 
solely based on where the customer or the customer's business 
activity is located when the customer or business activity is within 
the geographic market served by the covered bank.
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    Under this proposed rule, if a covered bank offers cash management 
services or commercial lending and specifically provides such services 
to a large retailer, the bank would be required to offer such services 
to any other lawful business (e.g., an electric utility or a family 
planning organization) on proportionally equal terms. The covered 
bank's decision to deny one of these services to a person could not 
include consideration of the bank's opinion (or the opinion of its 
employees or customers) of the person, the person's legal business 
endeavors, or any lawful activity in which the person is engaging or 
has engaged. However, the covered bank must consider factors such as 
compliance with laws and regulations and safety and soundness, in 
deciding whether to provide services to the person.\22\
---------------------------------------------------------------------------

    \22\ This includes, for example, the Bank Secrecy Act, anti-
money laundering regulations, and applicable consumer protection 
laws, such as fair lending and anti-discrimination laws.
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    Furthermore, under the proposal, a covered bank could deny a person 
access to a financial service without violating its obligation to 
provide fair access to financial services if the bank's decision is 
justified by the quantified and documented failure of the person to 
meet quantitative, impartial risk-based standards established by the 
bank in advance (e.g., the person's inability to pay for the service or 
creditworthiness or an objective assessment of the person's 
collateral). Nothing in the proposal would require a bank to offer a 
particular service; the proposal requires only that the financial 
services offered by a bank to some customers are offered on 
proportionally equal terms to all customers engaged in lawful 
activities.
    A covered bank should also consider whether it has the expertise or 
knowledge to offer a service in a given market. For example, while the 
rule would not require a covered bank to provide asset-based lending 
services collateralized by accounts receivable, if the bank provides 
this service to some

[[Page 75266]]

customers, then it would be impermissible for the bank to categorically 
deny access to this service to firms in a particular sector, given that 
the risks attendant to this type of lending reflect the risks of the 
firm's customers' accounts payable and would not change based on the 
sector in which the firm operates. A covered bank that operates 
consistent with this proposal would satisfy its obligation to provide 
fair access to financial services.
    The OCC invites comments on all aspects of this proposal.

III. Regulatory Analyses

    Paperwork Reduction Act. In accordance with the requirements of the 
Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., the OCC 
may not conduct or sponsor, and respondents are not required to respond 
to, an information collection unless it displays a currently valid 
Office of Management and Budget (OMB) control number. The proposed rule 
contains no information collection requirements under the PRA. 
Therefore, no filings will be made with OMB.
    Regulatory Flexibility Act. The Regulatory Flexibility Act (RFA), 5 
U.S.C. 601 et seq., requires an agency, in connection with a proposed 
rule, to prepare an Initial Regulatory Flexibility Analysis describing 
the impact of the rule on small entities (defined by the Small Business 
Administration (SBA) for purposes of the RFA to include commercial 
banks and savings institutions with total assets of $600 million or 
less and trust companies with total assets of $41.5 million or less) or 
to certify that the proposed rule would not have a significant economic 
impact on a substantial number of small entities. The OCC currently 
supervises approximately 745 small entities. Because the proposed rule 
would apply generally to OCC-supervised banks that have $100 billion or 
more in total assets, the proposed rule would not affect any small OCC-
supervised entities. Therefore, the OCC certifies that the proposed 
rule would not have a significant economic impact on a substantial 
number of small entities.
    Unfunded Mandates Reform Act. Consistent with the Unfunded Mandates 
Reform Act of 1995 (UMRA), 2 U.S.C. 1532, the OCC considers whether the 
proposed rule includes a Federal mandate that may result in the 
expenditure by state, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million adjusted for inflation 
(currently $157 million) in any one year. If any covered banks have 
risk-based standards that include criteria that would not be allowed 
under the proposed rule, the elimination of the prohibited criteria 
would impose little, if any, burden on covered banks. Therefore, the 
proposed rule would not result in an expenditure of $157 million or 
more annually by state, local, and tribal governments, or by the 
private sector.
    Riegle Community Development and Regulatory Improvement Act. 
Pursuant to section 302(a) of the Riegle Community Development and 
Regulatory Improvement Act of 1994 (RCDRIA), 12 U.S.C. 4802(a), in 
determining the effective date and administrative compliance 
requirements for new regulations that impose additional reporting, 
disclosure, or other requirements on insured depository institutions, 
the OCC must consider, consistent with principles of safety and 
soundness and the public interest, any administrative burdens that such 
regulations would place on depository institutions, including small 
depository institutions, and customers of depository institutions, as 
well as the benefits of such regulations. In addition, section 302(b) 
of RCDRIA, 12 U.S.C. 4802(b), requires new regulations and amendments 
to regulations that impose additional reporting, disclosures, or other 
new requirements on insured depository institutions generally to take 
effect on the first day of a calendar quarter that begins on or after 
the date on which the regulations are published in final form. The OCC 
invites comments that will inform its consideration of the 
administrative burdens and the benefits of its proposal, as well as the 
effective date of the final rule.

List of Subjects in 12 CFR Part 55

    Banks and banking, Definitions, Federal savings associations, 
National banks, Risk, Safety and soundness.

    For the reasons set out in the preamble, the OCC proposes to add 
part 12 CFR part 55, consisting of Sec. Sec.  55.1 and 55.2, to read as 
follows:

PART 55--FAIR ACCESS TO FINANCIAL SERVICES

    Authority:  12 U.S.C. 1 et seq. and 12 U.S.C. 93a.


Sec.  55.1   Fair access to financial services.

    (a) For purposes of this section:
    (1)(i) Covered bank means an entity for which the Office of the 
Comptroller of the Currency is the appropriate Federal banking agency 
as defined in 12 U.S.C. 1813(q)(1) that has the ability to:
    (A) Raise the price a person has to pay to obtain an offered 
financial service from the bank or from a competitor; or
    (B) Significantly impede a person, or a person's business 
activities, in favor of or to the advantage of another person.
    (ii) A bank is presumed not to meet the definition of covered bank 
in paragraph (a)(1)(i) of this section if it has less than $100 billion 
in total assets.
    (iii) A bank is presumed to meet the definition of covered bank in 
paragraph (a)(1)(i) of this section if it has $100 billion or more in 
total assets. A bank that meets the criteria in this paragraph 
(a)(1)(iii) can seek to rebut this presumption by submitting to the 
Office of the Comptroller of the Currency written materials that, in 
the agency's judgment, demonstrate the bank does not meet the 
definition of covered bank in paragraph (a)(1)(i) of this section.
    (2) Financial service means a financial product or service.
    (3) Person means:
    (i) Any natural person; or
    (ii) Any partnership, corporation, or other business or legal 
entity.
    (b) To provide fair access to financial services, a covered bank 
shall:
    (1) Make each financial service it offers available to all persons 
in the geographic market served by the covered bank on proportionally 
equal terms;
    (2) Not deny any person a financial service the bank offers except 
to the extent justified by such person's quantified and documented 
failure to meet quantitative, impartial risk-based standards 
established in advance by the covered bank;
    (3) Not deny any person a financial service the bank offers when 
the effect of the denial is to prevent, limit, or otherwise 
disadvantage the person:
    (i) From entering or competing in a market or business segment; or
    (ii) In such a way that benefits another person or business 
activity in which the covered bank has a financial interest; and
    (4) Not deny, in coordination with others, any person a financial 
service the bank offers.


Sec.  55.2   [Reserved]

Brian P. Brooks,
Acting Comptroller of the Currency.
[FR Doc. 2020-26067 Filed 11-24-20; 8:45 am]
BILLING CODE 4810-33-P