OCC clarifies policy on politicized or unlawful debanking

The OCC issued two bulletins clarifying its policies on politicized or unlawful debanking in accordance with last month’s executive order on ensuring fair banking for all Americans.

Licensing and CRA: In a bulletin to banks on licensing filings and in assessing bank performance under the Community Reinvestment Act, the OCC said it considers a bank’s record as well as policies and procedures on avoiding politicized or unlawful debanking when the agency evaluates for licensing activities or determining a bank’s CRA rating.

Protecting Customer Records: A separate OCC bulletin on protecting customers’ financial records said banks:

• Have legal obligations to protect customers' financial records unless disclosure is required by law, including from requests by government agencies.

• Should ensure compliance with the Right to Financial Privacy Act and the proper usage of Suspicious Activity Reports.

• Should review President Donald Trump’s executive order on fair banking and, if necessary, adjust their policies and procedures.

About the Executive Order: Trump’s August “Guaranteeing Free and Fair Banking for All Americans” executive order directs federal banking regulators to remove the use of reputation risk in their materials and identify financial institutions that have had policies or practices that facilitate politicized or unlawful debanking and to take appropriate remedial action.

SBA Action: The Small Business Administration last month ordered the banks in its network to halt the practice of debanking certain individuals and businesses and to submit reports to the agency on their compliance with the executive order.

ICBA Advocacy on SBA Letter: ICBA is in contact with the SBA on the agency’s letter to seek clarity on banking industry compliance requirements and to minimize the reporting burden on community banks. ICBA is also urging the SBA to coordinate with the federal banking regulators in implementing the executive order.

ICBA View: In a national news release following the release of the executive order, ICBA distinguished community banks from larger institutions and said the community bank business model is rooted in local relationships and trust, not transaction volume or political motivations. ICBA strongly opposed “Operation Choke Point” initiatives under previous administrations, which aimed to discourage financial institutions from providing payments and deposit services to legal but politically disfavored industries.