Crapo presses banks to keep serving 'politically disfavored' industries

Senate Banking Committee Chairman Mike Crapo, R-Idaho, urged large-bank CEOs "to send a clear signal" that they will continue providing credit to “politically disfavored” industries.

Crapo did not cite specific industries — such as gun manufacturers, private prisons and oil companies — tied to questions about banks' role in polarizing issues including gun control and immigration. But in letters Tuesday to CEOs of the eight largest banks, he said they "should not seek to replace legislators and policymakers."

“I want to express my concern with recent news reports suggesting that large banks may withhold access to credit and services to customers and companies that are operating businesses that comply with federal and state law (and, in some cases, are engaged in Constitutionally-protected activities), but are politically disfavored,” Crapo wrote.

Andrew Harrer/Bloomberg

While he did not name specific sectors, Crapo included a footnote to a Politico article discussing how Rep. Alexandria Ocasio-Cortez and other Democrats have pressured banks to cut ties with companies such as private prisons firms that manage that manage immigration detention centers.

The one-page letters were sent Tuesday to the heads of Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, BNY Mellon and State Street.

Earlier this month, JPMorgan announced that it would no longer finance private prisons, and Wells Fargo has significantly reduced its investments in the prison industry as well.

Last year, Bank of America and Citigroup both issued new policies restricting their activity with gun sellers after the school shooting in Parkland, Fla. Several banks also distanced themselves from financing the Dakota Access Pipeline in response to heated national protests.

Crapo issued his own warning to banks not to let politics get in the way of which companies they serve.

“Banks serve customers who are geographically and politically diverse, and it is wrong to use essential banking services as a way to choke off such services to lawful, creditworthy businesses,” Crapo wrote.

Crapo then raised the issue of Operation Choke Point, an Obama administration effort to use banks to restrict certain industries.

“Banks were not chartered to manage social policy by limiting credit to politically disfavored industries or promoting credit to politically favored industries,” Crapo wrote. “During the Obama Administration, I fought against 'Operation Choke Point,' an initiative in which Federal agencies pressured banks to 'choke-off' politically disfavored industries’ access to payment systems and banking services."

Crapo continued: "Operation Choke Point was inappropriate, and banks should send a clear signal that they will not restrict credit and services to politically disfavored industries.”