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Bank regulator finalizes controversial 'fair access' rule as agency head departs

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Bank regulator finalizes controversial 'fair access' rule as agency head departs

The Office of the Comptroller of the Currency finalized its Fair Access to Financial Services rule on Jan. 14, the same day acting Comptroller Brian Brooks stepped down.

The controversial rule takes effect April 1 and would require banks with more than $100 billion in assets to serve all legal industries, putting an end to bank boycotts of certain sectors. Brooks said in a statement Jan. 14 that "elected officials should determine what is legal and illegal in our country."

"When a large bank decides to cut off access to charities or even embassies serving dangerous parts of the world or companies conducting legal businesses in the United States that support local jobs and the national economy, they need to show their work and the legitimate business reasons for doing so," Brooks said. "[B]anks should not terminate services to entire categories of customers without conducting individual risk assessments."

Under the rule, banks will continue to determine their product lines and geographic markets and are "free to make legitimate business decisions about what and whom to serve," the OCC said in a news release. However, covered banks must make their products and services available to all customers in the communities they serve, using quantitative, impartial, risk-based standards.

"Under the rule, a covered bank's decision to deny services based on such objective assessment would not violate the bank's obligation to provide fair access. However, a covered bank's decision not to offer a specific kind of financial product or service or not to compete in a geographic market is unaffected," the OCC continued.

The proposed rule drew feedback from a wide range of stakeholders during a 30-day comment period that some observers said was too short given the complexity of the issue. The OCC said it considered feedback from more than 35,000 comments and suggestions in drafting the final rule.

As a result of that feedback, the regulator removed only the part of the proposal that would have required banks not to deny any person a financial service if denying them would 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. The OCC said that particular requirement would have created regulatory burden without contributing to the primary objective of the rule. Most of the rest of the rule is unchanged from the proposal.