In recent years, some banks have balked at lending to the gun industry. Now, in its waning days, the Trump administration is advancing a rule through a little-known agency that would make it much harder for banks to deny services to gun makers, sellers, and distributors. Experts and banking industry groups say the rule is unprecedented.

In a notice published in the federal register in late November, officials from the Office of the Comptroller of the Currency, which is part of the Treasury Department, laid out a new rule that purports to ensure “fair access” to banking and financial services. The rule, if adopted, would require banks to evaluate companies solely on quantitative and financial metrics, not on political considerations, the bank’s opinion of an industry, or broader societal consequences.

“Organizations involved in politically controversial but lawful businesses — whether family planning organizations, energy companies, or otherwise — are entitled to fair access to financial services under the law,” the OCC wrote in the proposal, which specifically cites several cases in which banks have refused services to gunmakers and sellers.

Experts say it will have consequences not just for how banks do business with the gun and ammunition manufacturers, but with companies in fossil fuels and mining, private prisons, and payday lenders. 

“I’m hard pressed to think of a previous time where OCC did rulemaking that had such an obvious political bent to it,” said Adam Levitin, a professor at Georgetown Law and an expert on the banking industry and financial regulation. 

The rule change comes after numerous banks have cut ties with gunmakers over reputational, brand, and values concerns. In the last two years, Bank of America, JP Morgan Chase, and other institutions have pulled financial support from the firearms and ammunition industries. Others, like Citibank, have placed restrictions on their partners — like age requirements or banning the sale of high-capacity magazines. The measures come partially as a result of advocacy campaigns on the part of gun violence prevention groups, like Guns Down America and Everytown for Gun Safety.

“After Parkland, hundreds of thousands of young people came out to the streets and became involved in gun reform in a real way,” said Igor Volsky, the executive director of Guns Down America. “You saw a lot of businesses breaking ties with the NRA, ending special arrangements they had with the gun industry because they understood on some level that their future customers expected them to do better, and that there could be some growth implications from continuing to do that kind of business.”

“Debanking” — as conservatives and gun rights groups often call it — can involve refusing loans, placing restrictions on partners, or cutting off access to payment services. The practice has drawn the ire of GOP lawmakers, who wrote to the Treasury Department earlier this year urging its agencies to step in and stop the practice. In a separate letter, members of Alaska’s congressional delegation also asked the OCC and the Federal Reserve to intervene over concerns that the nation’s largest banks were refusing to finance new oil and gas projects in the Arctic. 

If the rule is finalized, banks with $100 billion or more in assets — the 22 largest banks in the country — would have a harder time ending existing relationships with gun manufacturers and denying them access to new financial services. While the rule attempts to limit such decisions to assessments based just on financial metrics, the reality is that financial institutions have been cutting ties in large part because of financial concerns.

“Even if the bank doesn’t have any problem with guns, it’s responding to the tastes of its customer base,” said Levitin, the Georgetown professor. “They may be worried they’ll lose long-standing clients, that depositors will pull their money, that they’ll have trouble, that their share price will collapse.” 

He said the proposed rule doesn’t seem to take into account the risk that banks may assume when working with businesses that large swaths of the public view as unsavory. While lending to a gunmaker may be profitable and low risk, the association could affect the bank’s relationship with other customers. Money and politics are not completely separable.

“The OCC is concerned about trying to protect certain industries that are politically very aligned with the Republican Party and have come under a lot of scrutiny, or at least calls for greater regulation, in the last several years,” Levitin said.

Conservative lobbying groups, gunmakers, fossil fuel companies, and other businesses that say their access to banking services has been limited or cut off because of pressure from advocacy groups are supporting the proposal. The OCC says the large banks’ market dominance should make them subject to the increased scrutiny. 

“A decision by one or more of these banks not to provide a person with fair access to financial services could have a significant effect on that person, the nation’s financial and economic systems, and the global economy. This effect is all the more likely if the financial service at issue is not available on reasonable terms elsewhere,” the office wrote in the proposed rule, though Levitin said the gun industry still has plenty of other avenues for financing.

“If every national bank refused to loan to an industry, there are thousands of banks that are not national banks, and there are funding sources that are not from banks at all,” Levitin said, questioning the OCC’s justification for the rule.

The rule is subject to public comment until January 4, after which time the OCC could finalize it before President-elect Joe Biden is sworn in on January 20. In a letter to Brian Brooks, the acting comptroller of the currency, a coalition of the nation’s largest banking associations called the proposal “unprecedented” and asked that the comment period be extended for at least 30 more days, saying they needed more time to evaluate the rule “in light of the magnitude and potential consequences.” The American Banking Association and the Consumer Bankers Association declined comment.

“The OCC claims it is protecting politically disfavored customers, but really it is just telling senior management and bank boards that they cannot be trusted to make good decisions,” the Bank Policy Institute, another advocacy and lobbying group representing leading banks, wrote, saying the agency lacked the legal authority to promulgate this rule. 

Extending the comment period by 30 days, though unlikely, would potentially give Biden time to nominate a new comptroller. That official could slow or reverse the rule-making process, though it’s not clear if Biden will take that opportunity or if the Senate would confirm his nominee. The Biden transition team did not respond to requests for comment.

If the rule is finalized before Biden takes office or before new leadership is confirmed at the OCC, it could be hard to undo or modify. But the rule could be vulnerable to litigation and potentially to the rarely used Congressional Review Act, which allows Congress to override new regulations within 60 legislative days by a simple majority vote. Such a vote to undo this regulation could get bipartisan support, according to Levitin. “The banking industry doesn’t like this,” he said. “That will open up some Republican support. So, even if Democrats don’t have control of the Senate. They might still be able to do this.”