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US Watchdog: Big US banks can no longer deny funding to oil and gas

Days before the end of the current administration, US banking industry regulators have outlined a rule that big banks in America cannot refuse lending to oil and gas companies.

The Comptroller-General of Currency (OCC) released Thursday to ensure fair access to so-called banking services, “banks should conduct risk assessments of individual clients rather than make broader decisions that are available to banks.” Affect all Type or class of the customer when arranging access to finance and credit services “

Banks are becoming more aware of the reputational impact of lending to oil and gas projects in sensitive areas like the Arctic. In the United States, Goldman Sachs said in December 201

9 that it would reject financing for new exploration and production of Arctic oil in the Arctic and the development of a new thermal coal mine or mining of the Wells Fargo, JPMorgan and Deutsche Bank bands, also said they. It will stop funding new oil and gas projects in the Arctic.

The rule, expected to take effect April 1, 2021, applies to the largest banks with more than $ 100 billion in assets.

However, the largest bank in the United States criticized the rule during the comment period that ended last week, saying the new rules “appear to prohibit banks from exercising their judgments and qualitative considerations, including reputational risks,” in the process. Decide what to give Financial services, which is completely inconsistent with the way the OCC had previously expected banks to make risk management decisions.

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Greg Baer, ​​president and CEO of Bank Policy Institute (BPI), a large U.S. bank research and advocacy group, commented on the rule summarized Thursday:

“The rules are neither logical nor legal, disregarding fundamental facts about how banks work and will destroy the security and stability of banks in force.”

The incoming Biden administration had a number of ways to stop the rule from taking effect, The Hill’s comments, including the implementation of congressional checks or delays in the enforcement of the rules from the new acting regulator, which the president had. Appointed Joe Biden is likely to be named next week as he The nominees for this role are confirmed by the Senate.

By Charles Kennedy for Oilprice.com

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