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New rule could force banks to lend to oil companies

January 14, 2021. Summarized by summa-bot.

Compression ratio: 19.8%. 1 min read.

A pump jack operates near Sublette, Kansas, U.S., on Friday, Sept. 25, 2020. After all the trauma the U.S. oil industry has been through this year -- from production cuts to mass layoffs and a string of bankruptcies -- many producers say theyre still prioritizing output over reducing debt. Photographer: Angus Mordant/Bloomberg via Getty Images

Big banks, climate activists and banking reform advocates don't agree on much, these days, but they have joined forces to denounce a proposed Trump administration rule that would make it harder for banks to cut ties with the fossil fuel industry.

New York (CNN Business)Big banks, climate activists and banking reform advocates don't agree on much, but they have joined forces to denounce a proposed Trump administration rule that would make it harder for banks to cut ties with the fossil fuel industry.

Environmental groups fear the rule would short-circuit growing momentum among big banks to distance themselves from oil and coal companies whose fortunes are threatened by the climate crisis.

With the climate crisis intensifying, some big banks have recently ruled out making certain loans in the hope of easing both their reputational and credit risks.

The OCC, in its proposed rule, suggested banks are overstepping by deciding not to lend to oil companies because they believe the United States should be in the Paris climate agreement.

McCoy, a former regulator at the Consumer Financial Protection Bureau, points out that climate change risk "poses long-term safety and soundness concerns to national banks that lend to the fossil fuel industry. "

"Banks have begun taking steps to protect against that [climate] risk, and the OCC should help them down that path, not throw hurdles in the way," Ceres said in the statement.

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