The enduring benefit of the free-market for every consumer is that it ultimately leaves choice to the individual. The programs we choose to watch, the stores we care to shop at, and the products we bring into our homes are all within the control of our individual preference. Nobody wants Bernie Sanders picking their wardrobe in the morning.
Economic freedom is at the heart of our nation’s envious prosperity. Unfortunately, the left sees freedom of choice through an entirely different lens, with their preferences beyond reproach, but everyone else’s is subject to ideological approval. The left has made a cottage industry out of organizing boycotts against those who are not simpatico with their political agenda, from Chick-Fil-A, to Home Depot, to Fox News, but it is their willingness to use the power of the federal government to wage warfare against lawful businesses that is most chilling.
A prime example of this ideological bullying now centers on the U.S. banking industry, which has come under fire from liberal politicians for serving clients that the Left has tried but failed to regulate or legislate out of business. On Capitol Hill, bank executives are repeatedly being grilled by the likes of Reps. Alexandria Ocasio-Cortez and Carolyn Maloney, and Sens. Brian Schatz and Elizabeth Warren, for extending credit and banking services to energy companies, gun makers, payday lenders, private detention companies, and others.
Knowing the power these lawmakers have over their institutions, bankers are heeding their words.
As a consequence, there is now a tug-of-war over the Community Reinvestment Act, which sets forth requirements that banks employ non-discriminatory practices in their lending in order to serve community needs. The comptroller of the currency recently issued new guidelines that seek to improve lending practices and increase bank activity in low- and moderate-income communities — a move that seemingly keeps banks from favoring one type of customer over another based on political pressure. However, by limiting the criteria assessment for how banks serve their communities, the guidelines leave a large gap for bad practices.
A group of senators recognized this troubling pattern where banks are skirting their obligations in order to alleviate left-wing pressure. They called for review and revision of the CRA. Specifically, they asserted, “there is a clear body of evidence that the banks are withholding services explicitly to effectuate social change,” rather than focusing on the pillars of profitability and safety and financial soundness. The Left is, of course, up in arms over these assertions and will oppose any effort to eradicate these lending practices. Political pressure from the Left has already led many banks (as well as airlines and insurance companies) to end promotions and discounts for NRA members, and that’s just a foretaste of what’s in store if the entire banking industry is held under the thumb of the Left’s anti-capitalist agenda.
A secret Obama administration project, unleashed in 2013 and dubbed “Operation Chokepoint,” was the progenitor of the current campaign to de-bank ideologically incorrect businesses. Few Americans, including most in Congress, understood that the previous administration was running a covert program through the Department of Justice, FDIC, and CFPB, forcing banks to cut ties with lawful businesses that were ideologically unacceptable. Thankfully, the Trump administration ended this program, but the blueprint for Operation Chokepoint unfortunately lives on.
The concern regarding the politicization of our banking system is obvious, primarily because banking discrimination is prohibited by law. The Office of the Comptroller of the Currency notes that federal agencies “will not tolerate lending discrimination in any form.” And that includes singling out customers whose business may offend a particular grievance group. No American is secure when our economic system, anchored in complex and comprehensive banking regulations, is held hostage to a political agenda.
Today it will be gun makers, private detentions, or fossil fuel companies finding themselves locked out of banks. Tomorrow it will be contractors building the border wall, or the defense industry, or Big Tech, or companies that dare serve religious institutions. What would happen if banks started targeting companies the Left favored, such as renewable energy companies or abortion clinics? Leftists would certainly sing a different tune then.
The poisoning of our banking system with ideological litmus tests will lead to a toxic and adversarial relationship with industries, which will hurt workers, small businesses, entrepreneurs, local communities, and America’s economic competitiveness in general.
Discrimination in any form has no place in our economy, especially in banking system. Federal laws such as the CRA and the financial institutions it oversees can only serve consumers and our economy by operating with fairness and transparency. Our economy should not be held hostage based on what political party holds power in Washington.
Gerard Scimeca is co-founder and Vice President of CASE, Consumer Action for a Strong Economy.
