Rep. Andy Barr (R-KY) introduced legislation on Thursday that would prevent big banks from refusing or limiting financial services to certain businesses, such as those in the fossil fuel industry.
The bill, the Fair Access to Banking Act, already has more than three-dozen co-sponsors and is companion legislation to a bill introduced in the Senate by Sen. Kevin Cramer (R-ND). The effort is part of a broader Republican pushback against the environmental, social, and governance movement, or ESG.
The bill would mandate banks with more than $100 billion in total consolidated assets to provide fair access to banking services, capital, and credit to industries. The goal is to prevent banks from choking off financial services to politically divisive companies such as gun manufacturers and oil and gas companies.
"Banks should make lending decisions relying on objective, risk-based metrics, not the standards of woke corporate cancel culture," Barr said in a statement. "My legislation codifies the Fair Access Rule to ensure that Radical environmentalists, gun control advocates, crypto antagonists and other political activists cannot weaponize financial institutions in their fight to achieve their political agenda."
HOUSE FAILS TO OVERRIDE BIDEN VETO OF ESG LEGISLATION
The legislation is meant to codify the core strictures of the Fair Access final rule, which was developed under the Trump administration to fight back against ESG. Just days after President Joe Biden was sworn into office, the Office of the Comptroller of the Currency announced it was halting the publication of the Fair Access rule, a win for environmental groups and others who view ESG as a way that finance and business can cause social change (for example, mitigating climate change).
The Barr legislation would also require big banks to “provide written justification for why it is denying a person financial services to avoid ambiguity” in order to make sure that the firms aren’t denying service based just upon the reputational risk of doing business with a politically fraught industry, Barr said in a letter to colleagues.
If the banks covered in the bill refuse to do business with someone in violation of the legislation, they risk losing the use of the Federal Reserve's discount window lending programs and could have their status as an insured depository institution terminated.
“Over the last several years we have witnessed financial firms publicly commit not to do business with certain legal companies in politically unpopular industries (e.g., fossil energy, firearms, crypto),” Barr said in the letter to colleagues. “These decisions often were not based on the creditworthiness or financial soundness of the customer, but rather were driven by a number of non-pecuniary factors.”
The move is just another foray in a growing GOP battle against ESG, one in which it appears to be making headway.
Biden was forced to make the first veto of his presidency earlier this year after Congress passed a resolution to cancel a Labor Department rule that allows retirement plan managers to weigh ESG factors when making investments. Centrist Sens. Joe Manchin (D-WV) and Jon Tester (D-MT) joined with Republicans on the issue in the narrowly divided Senate.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Anti-ESG sentiment has been growing in red states, although particularly among those in energy-producing states, which fear that the ESG push could end up “blacklisting” fossil fuel companies. Both West Virginia and Montana, represented by Manchin and Tester, respectively, rely disproportionately on coal.
Several GOP officials at the state level have used their power to combat ESG as well. For example, Florida Gov. Ron DeSantis, who is seen as a Republican front-runner in 2024, launched a broadside against ESG earlier this year.