Better Banking Blog
Press Release

Beneficial State Bank Tells OCC ‘Fair Access’ Rule is Misguided, Rushed, & Unworkable

Jan 08, 2021


Beneficial State Bank, a mission-driven community bank, and its nonprofit owner Beneficial State Foundation, issued comments this week to the Office of the Comptroller of the Currency saying its proposed ‘Fair Access to Financial Services’ rule misinterprets fair lending laws to support high-risk industries and harmful business practices.

Jan. 8, 2021, Oakland, Calif. – Beneficial State Bank and its nonprofit owner Beneficial State Foundation submitted comments to the Office of the Comptroller this week expressing their objection to the Office’s proposed ‘Fair Access to Financial Services’ rule—which the bank called “misguided and rushed.”

“During a time of increased economic instability and insecurity heightened by the COVID-19 pandemic, we believe regulators should focus on how to protect people interacting in the financial marketplace through strengthened regulations and clear guidance. Instead, we see a rush to defend corporations,” the letter states. “Financial institutions, bank industry associations, and advocates for economic well-being alike are scrambling to respond to these confusing reinterpretations of fundamental concepts like fair access and discrimination in lending – all while trying to address immediate crises our customers and stakeholders are dealing with.”

The proposed rule would require big banks to finance entities such as payday lenders, fossil fuels companies, private prisons, and other high-risk industries that are controversial due to their negative social and environmental impact.

“What this cynical rule actually does is disallow banks from exercising prudent judgment over the inherent risk of a company’s business model, harmful business practices, systemic or industry risk, or reputation risk. While banks themselves are rightfully required to treat people fairly, act ethically, and utilize sound risk management practices, this proposal subverts those mandates and perversely re-interprets fair lending to require big banks to turn a blind eye to excessive risk and harmful business practices, provided they are profitable,” said Beneficial State Bank CEO Randell Leach. “Instead, the OCC should further support banks to make loans in a manner that helps people and the environment directly.”

Beneficial State argues the proposal is unworkable for several reasons, including:

  • It forces big banks to help powerful corporations that unfairly profit through exploitative business practices or high risk / unsustainable industries.
  • It misinterprets fair lending laws intended to protect people, not powerful corporations.
  • It dramatically reinterprets safety and soundness regulations that already rightfully compel banks to make decisions based on risk and reputation.
  • It distracts from addressing the real problems of discrimination in lending.

Beneficial State asserts that banks must truly seek to help people, businesses, communities and the environment, and must not, either directly or indirectly, support unsustainable, unethical, predatory, or exploitative business practices. To achieve this, banks must use sound judgment, have increased transparency, and be held accountable for their action or inaction.

“Discrimination in lending occurs when financial institutions deny people loans based on race, gender, and/or other protected status. First, the existing rules are intended to protect individual consumers (people), not corporations. Second, if the spirit of fair lending is to ensure disadvantaged people are not being discriminated against, then affording the same protections to entire industries that harm those very same people is especially cynical and abusive,” Leach said.

"Not only is the OCC proposal a sweeping interference in banking markets for the sake of corporate and political interests, but it also undermines fair access and fair treatment as mandated by long-standing banking laws,” said Kat Taylor, Co-Founder and Board Chair of Beneficial State Bank. "During a time of increased economic insecurity heightened by the pandemic, regulators should instead focus on issuing honest guidance and strong, data-driven lending practices that protect underserved communities and the safety and soundness of the banking system."

Read the full letter.

Beneficial State Bank Icon
About Beneficial State Bank

Beneficial State Bank (Beneficial State) is a state-chartered, federally insured bank with branches in California, Oregon, and Washington. Beneficial State serves the triple bottom line of people, planet, and prosperity for all, which involves serving its communities, supporting positive environmental outcomes, and achieving long-term financial sustainability. A unique ownership structure supports these strategic priorities: the bank’s capital is majority-owned by the nonprofit Beneficial State Foundation. This means its economic rights are fully aligned with, and permanently governed in, the public interest.

Beneficial State Bank is a founding signatory of the UN’s Principles for Responsible Banking, a member of the Global Alliance for Banking on Values, a Community Development Financial Institution (CDFI), Fossil Free Certified, and one of the world’s top-rated Certified B Corporations.

Media Contact:
EMC Communications
(650) 455-9928

Concentric Orange Hearts

People, Planet, Prosperity for All

We lend over $1 billion to support a brighter tomorrow, including affordable housing and the environment. When you bank beneficially, you choose to support people and planet.

Choose a Bank that Invests in Tomorrow

Bank Institution Icon

Beneficial State Bank serves the triple-bottom-line of people, planet, and prosperity for all. That means prioritizing social justice and environmental sustainability. Our clients want to see their money put to good use – funding causes that defend our planet and build resiliency in our communities. Change your bank and help change the world.