Biden Administration Suspends Rule Protecting Businesses From Banking Discrimination

Experts disagree on whether the move is a win for free association.


The Biden administration has rolled back a Trump-era regulation meant to protect politically disfavored businesses, like gun manufacturers and cryptocurrency exchanges, from being categorically denied banking services. 

In a statement released January 28, the Office of the Comptroller of the Currency (OCC) said that the move will allow the new comptroller to review the rule and public comments the office had received. The OCC still suggests that banks not terminate broad categories of customers without assessing individual risk.

The Fair Access Rule was established in the last weeks of the Trump administration and was set to go into effect on April 1. It stated that "banks should conduct risk assessment of individual customers, rather than make broad-based decisions affecting whole categories or classes of customers when provisioning access to services, capital, and credit."

This regulation was meant to shield politically unpopular but otherwise legal companies from banking discrimination, following Operation Chokepoint, a program initiated by President Barack Obama's Justice Department. While ostensibly designed to combat fraud, in practice, Reason writers have observed, it empowered the government to target unfavorable industries, such as payday lending and pornography, by "coercing private businesses in an attempt to centrally engineer the American marketplace based on its own politically biased moral judgments."

"Officials at both the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) threatened banks with regulatory pressure if they did not bend to their will," wrote former U.S. Attorney Frank Keating for The Hill. "Gun and ammunition dealers, payday lenders and other businesses operating legally suddenly found banks terminating their accounts with little explanation aside from 'regulatory pressure.'"

In 2017, Trump's Department of Justice ended the program, calling it "misguided," stating that "law-abiding businesses should not be targeted simply for operating in an industry that a particular administration might disfavor."

Trump's Fair Access Rule went a step further by prohibiting financial institutions from discriminating against entire industries. Andrea O'Sullivan, director of the Center for Technology and Innovation at the James Madison Institute, has argued here at Reason that Trump's rule would've protected unfairly targeted businesses.

"The largest banks in the country—those with more than $100 billion in assets—would be prohibited from red-lining politically disfavored industries just as they are prohibited from red-lining politically oppressed populations." she wrote. "Rather, a gun manufacturer or pornography company or payday lender must be evaluated on the terms of their individual creditworthiness."

Not every free market scholar agrees with this assessment. John Berlau, a senior fellow at the Competitive Enterprise Institute, tells Reason that the rule's broad wording would do more than merely prevent large banks from discriminating against unpopular businesses. It would also force small banks into relationships with businesses they are not equipped to handle.  

"Under this rule," says Berlau, "a digital bank could not say, 'We're not lending to paper companies because it's not our business model.'"

Although it has been reported that the regulation would only affect banks with $100 billion in assets or more, that is not actually what the rule says. A small bank would be covered by the rule if it were to charge a higher cost for a loan because a customer is in an industry that the bank does not typically handle. A smaller bank could also be affected if it refuses a loan to that customer, and that rejection causes a competing bank to raise its price for a loan to that same customer.

"Vague terms like that can almost always be stretched to apply to just about any market participant," Berlau says.  

As an example, Berlau cites the Bird-in-Hand Bank of Pennsylvania, a small rural bank that specializes in providing loans to the Amish community. 

"If, for whatever reason, it didn't serve a new line of business or decided to charge more interest," Berlau says, "it could have conceivably raised the price [of a loan] because it offered an option where there are limited options."

Berlau argues that preventing banks from discriminating against certain industries violates their right to free association and would hurt niche banks that specialize in specific industries, like farming, industrial lending, or financial technology, forcing them to lend to businesses with which they are less familiar. 

A spokesperson for the OCC tells Reason that the next comptroller will review the Fair Access Rule to determine its future. Biden has not yet nominated a comptroller, and so the office could not provide a timeline of when a decision may happen.

This post has been updated to include a response from the OCC about the future of the rule and to correct a quote.

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  1. Any word on when the illegitimate president Biden suspends rules protecting banks from competition, making this actually a win for freedom of association rather than an end run around constitutional limitations on government powers by “encouraging” banks to discriminate against business that the government doesn’t like?

    1. Vote in fascists, get fascism; who knew?

      1. We didn’t vote them in. They Fortified Democracy against the voters.

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  2. Aw too bad then, but at least Biden isn’t mean tweeting. And the southern border is open for bidness so there is that. Reason should be happy.

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  3. Experts disagree on whether the move is a win for free association.

    Oh come now. Everyone knows “experts” are left-wing know-nothings. The most reliable sources of information are my Twitter feed, that random guy with a convincing Youtube video, and my Uncle Fester.

    1. Both of the experts cited are free-market advocates that happen to disagree on this particular issue.

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    2. Yes, dipshit. “Experts” are anyone that parrots the party narrative du jour. Everyone else is a conspiracy theorist, regardless of how qualified they are. Example: the coronavirus pandemic. Experts like politicians, journalists, and Hollywood celebrities recommended wearing masks (even two at a time for twice the masking power) while conspiracy theorists like doctors and biomedical researchers suggested, without evidence, that masks are ineffective at stopping the spread of viruses.

      1. That’s right. I know that if I want to get major surgery, I would be well advised to consult my Twitter feed before consulting any of those “experts” with fancy letters after their name.

        1. Literally silencing dissenting opinion is the surest way to prove that you’re right.

        2. AHAHAH jeff thinks surgery is the same as economics ahahaha

          no wonder he worships exeprts lololol

        3. Wait are you trying to tell us that economics isn’t just essentially astrology for politicians?

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    3. that random guy with a convincing Youtube video

      Brian Stelter?

      1. He said convincing Youtube video.

        1. Speaking of, I can’t decide if I want to spend my stimulus money on a Gibson ES335 or a Gretsch Model 6120.

          1. Until your shakes start you mean?

            1. Bet you he spends it all on vodka and fines for stalking his ex.

    4. We all know that you are an expert at stupidity and dishonesty. Congratulations.

    5. Spurious analogy.

    6. You think you are being funny, but you are actually correct.

      Just what would make an “expert’s” opinion more valuable than anyone else’s on a value judgment, and why should we accept it rather than forming our own? And why do you think it is a mark of honor for you to outsource your reasoning to someone else rather than an admission that you are easily lead?

  4. So let me get this straight, bakeries aren’t allowed to pick and choose their customers based on moral evaluations, but banks can?

    1. Bank MUST; and based on the political overlords whims.

    2. In the year 2021, a gay man must still pretend he doesn’t like cocks in order to get a cake for his orgy.

      1. not so. He can walk in to any bakery, whether a proprietorship or a supermarket in-store, and buy a cake for whatever event he chooses. No one will care enough to ask him where he parks his peter. Its when he wants to engage the creative design and presentation abilities of an individual artist to promote his particular perversion he will be, rightfully, denied service. I would not lend MY creative services of any sort to participate in a male’s “event” to celebrate or promote his sexual involvement with a twelve year old partner, male or female, for any amount of money. The fact that such activity with underage individuals is illegal while similar activity with older partners is not does not change the morality of either situation, and I will not “aid and abet” anyone in such activity because I then become complicit in it.
        But these banks can, with total impunity, deny service to entire classes of commercial activity on the basis “I doan LAHK it”. Banks are all chartered under federal government, and deal in what is legal tender for ALL debts public and private. They have also, of late, been known to terminate ALL banking services for certain classes of lawful activity, such as sale and/or manufacture of firearms. I could see it if a bank decided to terminate the banking relationship with, say, a motel client that was discovered to be running not a motel but a house of prostitution out of the facility.Such houses are contrary to law in most states, and the original statements as to “nature of business” the pimp runs was falsified . But to terminate an account because the owner, who opened it for the business account of his gun store can NOT be later denied the services because. the bank officers have recently got “woke” and “we doan lak GUNNNNZZZZ” the trade in which is fully lawful, now THAT would be wrong and shoiuld be illegal. But that is what is happening. Closing a credit card account for John Brown because he spent money at Cabelas or Sprtsman’s Warehouse is equally wrong and should be illegel.

      2. “Let them eat cock.”

        Marie Antoinette’s Cousin From Jersey

    3. No Banks are being FORCED to cut services to customers that certain government officials dislike based on the threat that those government officials will regulate Banks into non-existence if they don’t comply with the government officials demands. If left to their own devices most Banks would happily choose to continue to provide services to these financially sound but politically disfavored customers. See the ACLU’s amicus brief filled in support of the NRA against NY State…..

      Yeah, if you can actually get the ACLU to file a brief in support of the NRA, saying that the NRA’s rights had been violated… you can pretty much be assured the issue is a slam dunk.

    4. I’ll make it real straight for you. Anything is whatever way the progtards want, whenever they want.

      Time to get rid of the progtards.

    5. Nope. The banks aren’t going to be given any choice, either: They’ll be required to pick and chose their customers based on moral evaluations.

      The regulators’ moral evaluations, though, not the banks’.

  5. Bank regulators get ‘input’ from “the community” when they rule on banking activities. Obama started as a “community organizer”. The government won’t give direct orders to the banks; it is just a matter of the banks having to placate left wing community groups to be able to do their business.

    1. What community did Obama ever improve with his ‘community organizing’? Chicago is a bigger shithole than ever.

  6. This regulation was meant to shield politically unpopular but otherwise legal companies from banking discrimination, following Operation Chokepoint, a program initiated by President Barack Obama’s Justice Department.

    The word “politically unpopular” is going to require about a 10,000 word unpacking.

    1. It’s way simpler than that: if you’re anywhere right of Mao just go make your own bank.

      1. Can’t – way too regulated an industry. If Trump starts his own bank, the regulators will shut it down on general principle in a week.

      2. Actually not a bad policy suspension except it sounds like it was a counter-measure of the Federal Reserve Act that launched the Great Depression and put banks at the [WE] mobs disposal.

      3. Cryptocurrency – Done!

      4. “Go loan yourself money if you don’t like it”

        1. Having that *OPTION* is exactly what is needed. I’m afraid the [WE] mobs have taken that “option” off the table back in 1913. However; cryptocurrency apparently seems to be an option but it seems the world already see’s what’s going on and the price tag is almost at $50K…. ( wide-eyed ).

          1. The world has been aware of crappy governments ruining their local currencies far longer than we have been here. I tell everybody that it’s up to them to decide if their country is one of those that will ruin the value of the currency. More and more people are waking up to the fact that yes, it is happening here. And there. And everywhere.

  7. So it will be fine, if the republicians regain control, to stop banks from dealing with Hollywood, the NBA, Apple, and All left wing PACs?

    1. No, that wouldn’t be fine. A better, more practical answer from the right would be to relax banking regulations to make it possible for competitors to rise up, while vigorously enforcing regulations on existing banks that participated in fascist government programs like this.

      It’s a shame that it has come to this, but if there are no negative consequences for supporting fascism then big banks will continue to support fascism.

      1. Freedom of association anyone?

        1. Shutting out taxpayers from a system funded by taxpayers isn’t free association. It is collusion and monopolistic practices.

          1. ^THIS — The federal reserve act the brought us the Great Depression. All the meat should be CUT not just slices here and there; but certainly NOT regulative fascism as Moonrocks just flirted with. Acting like a Nazi because Nazi’s are being Nazi isn’t a solution at all to the bigger/actual problem it’s actually just throwing gas on the flames.

          2. Can you name me some business in this country that is not a part of a “system funded by taxpayers”?

            1. Sure; Everyone of them that isn’t being funded by taxpayers. Big Oil comes to mind right off the bat. The left has been laser-eyeing their ‘no subsidies’ for years. They even make and maintain their own roads in AK so sometimes not even part of the state-level (there is/or at least should be a difference) taxpayer system.

            2. moooove those goalposts!!!

              Jeff suddenly realizing he fucked up lolol

            3. Sucks for them, doesn’t it? If one takes federal funds, they cannot limit use against people who PROVIDED the money.

              Cannot claim “BUT MUH PRIVATE BIDNESS!” when the business ain’t private.

              1. Can you name a business that does not take federal funds, as you define the term?

                1. Does not seem to be my issue.

                  Want to be “MUH PRIVATE PLATFORM!!”?

                  Do not be taking MY money.

                  If you take MY money, then shut your trap and push the buttons, register monkey.

                2. Can you explain how taking public money makes one private?

                3. No business I own or work for takes federal dollars of any kind.

        2. This is just dishonest, you know the people proposing this don’t actually believe in freedom of association. Cherry picking cases where you don’t want to associate with right-wingers doesn’t give you the principled high ground.

        3. See above. If this was accompanied by a similar suspension of rules that protect banks from competition this would be fine, but it isn’t. There’s no legal possibility to Start Your Own Bank, so there’s no freedom to associate.

        4. Chemjeff, freedom from anything remotely approaching intelligence?

    2. I’m just not going to pretend that the federal governments ability to ‘coin’ money extends to them the ability to ‘regulate’ ALL the banks.

      1. Such niceties as federal protection of deposits and the providing of the banks monopoly powers…then they are not private.

    3. include BLM, Antie Fa, the Mad Mommas Agianst Guns for You and Me but Not for THEM, and all their pals, I’d be fine with that. Besides, that would be the “equality of outcome” non-discrimination the wailers are stumping for these days.

  8. SONNY MAZZONE is the spring 2021 Burton C. Gray Memorial Intern at Reason.

    Well damn, I didn’t notice we had a new intern here! Fuck you, Sonny Mazzone, you horrible piece of shit, I hope you get cancer and die. Welcome to the Reason commentariat!

  9. “As an example, Berlau cites the Bird-In-Hand Bank of Pennsylvania, a small rural bank that specializes in providing loans to the Amish community. “If, for whatever reason, it didn’t serve a new line of business or decided to charge more interest,” Berlau says, “it could have conceivably raised the price [of a loan] because it offered an option where there are limited options.”

    I’m sorry, but WTF does that mean in English?

    1. It means that, compared to the typical price of a loan, this one could be more expensive, but still cheaper than the infinite price of a loan that’s not available. By serving customers in a new line of business who couldn’t get loans elsewhere, the lender could run afoul of the regulation, by appearing to make that type of loan more costly.

  10. The Banks wouldn’t have been interested in “discriminating” against these customers in the first place if Federal and State regulators hadn’t been holding a gun to their heads, telling them to do it or else. NY State’s Dept of Finances for example threatened to audit banks into oblivion if they didn’t cut ties with the NRA. Even the ACLU filed an amicus brief in the case on the NRA’s behalf.

    Essentially government is trying to use their regulatory control over financial institutions to de facto eliminate businesses and organizations that they politically disfavor but can’t eliminate through legislation by making it impossible for those organizations to obtain financial services anywhere. There is absolutely no question which side of this issue free association is on.

    If left to their own liberty to choose, most financial institutions would be happy to serve these customers. The only reason most have them have been reluctant to do so…is government officials threatening them with legal ruin if they don’t bend to the officials will and cut ties with these organizations.

    1. I’ll give you a big amen and a awoman.

      1. a men.. men is the plural form of the word.

        a woman woman is the singular form.

        This clown is a sexist, promoting the inclusion og multiple men, but only one woman. I hope someone throws THIS right in the guy’s face.

  11. Bake that fucking cake.

    1. You bet, faggot.

      1. I’ve been on the internet. You rednecks like putting things up your butts more than any faggot.

        1. You gotta do something in your downtime.

        2. It’s not gay if you put things up your own butt.

          1. Not necessarily. Tony claims to be gay, and he definitely keeps his head crammed firmly up his own ass.

            Of course, Tony also lies by default, which means he may not be gay at all, so I guess there is room for doubt either way.

            Just sayin’.

  12. For all his faults, and they were/are many, by the Fall of 2020 Trump was the only thing standing against a soft totalitarian takeover of the government and the country.

    I hope you are happy with the result you wished and worked for.

  13. Worried about small banks with a regulation that only affected those with over $100 billion?

  14. This is the sort of government/business partnership in producing oppression that Reason spent the last four years working to bring about.

    They can’t just admit they were wrong in working against the most libertarian president we will see in our lifetimes to replace him with a guy who promised he would shutter entire industries and force the rest to create a political caste system. They have to dig up an “expert” to pretend it is a big win for liberty to have highly regulated banks decide who is politically reliable enough to be allowed banking services, and ultimately, who should be allowed to earn a living.

    Big, big win there for the stalwarts at Reason. Many more wins like this one and we will be fighting over the top bunk in the gulag.

  15. Section 230 for banks. Cool!

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