Arresting poverty, inequality and the racial wealth gap requires this genuinely transformational tool.
Federal bank examiners considered levying fines and sanctions when JPMorgan Chase informed them last year that faulty overdraft charges caused by a software glitch had impacted roughly 170,000 customers.
The Fed’s policy tools – interest rate manipulation, quantitative easing, and “Special Purpose Vehicles” – have all failed to revive local economies suffering from government-mandated shutdowns. . The Fed must rely on private banks to inject credit into Main Street, and private banks are currently unable or unwilling to do it. The tools the Fed actually needs are public banks, which could and would do the job.
On Friday, the Comptroller of the Currency, Brian Brooks, proposed a new rule that would prohibit banks from refusing to lend to “entire categories” of lawful businesses. It is, Brooks explained, an attempt to stop the “weaponization of banking,” insuring fair access to loans for controversial businesses. He cited private prisons and weapons manufacturers as possible beneficiaries, but there can be no doubt about another reason for the rule (which may or may not have time to take effect before the Trump Administration departs): activists have begun persuading banks to stop some of their massive lending to the fossil-fuel industry.