Why a ‘Fairness Doctrine’ for Woke Capital Will Backfire on Conservatives

By John Berlau

Thursday, December 10, 2020

 

In his majority opinion in Burwell v. Hobby Lobby, Justice Samuel Alito noted that a “corporation is simply a form of organization used by human beings to achieve desired ends.”  While some lawmakers and bureaucrats seem to think the employees and owners of corporations leave their individual rights at the door, both the Constitution and the Religious Freedom Restoration Act (RFRA) — the federal law that grants religious liberties beyond those in the First Amendment — say otherwise. Accordingly, based on the RFRA, the Supreme Court upheld the religious-freedom rights of corporations to opt out of a provision of Obamacare requiring businesses to include contraception in their employee health plans.

 

Conservatives and libertarians lauded Alito’s decision and generally oppose laws that compel business owners to engage in conduct that contradicts their beliefs. They have argued that the government should not coerce bakers, florists, or photographers to provide services for weddings that violate their moral and religious beliefs. Some defending the business owners may not necessarily agree with the beliefs in question, but oppose government coercion as a matter of principle.

 

Conservatives and libertarians also strongly object to reviving the Fairness Doctrine, under which the federal government compelled radio and television stations to provide air time to opposing viewpoints.

 

Those same conservatives and libertarians advocating freedom of conscience in business transactions should be alarmed by a proposed mandate that would effectively act as a “Fairness Doctrine” for banks. The Office of the Comptroller of the Currency (OCC), which charters and regulates many of the nation’s banks, proposed a rule in late November that would bar banks from turning down loans or other financial services “based on . . . [the] personal beliefs” of a bank’s owners or employees.

 

The OCC rule would make what it deems “fair access to financial services” an entitlement that banks must provide. Advocates are pushing the regulation to counter some banks’ bowing to demands of liberal groups by declining to service “unwoke” industries such as guns and oil. But the proposed rule also makes it clear that banks would have to provide “fair access” to causes and industries associated with the political left, including abortion clinics.

 

In fact, the rule and the OCC officials pushing it explicitly mention abortion clinics and “family-planning” so often that it comes across as obsessive. In the text of its regulation (page 14), the OCC states that “under this proposed rule, if a covered bank offers cash management services or commercial lending and specifically provides such services to a large retailer, the bank would be required to offer such services to any other lawful business (e.g., an electric utility or a family planning organization [emphasis added]) on proportionally equal terms.”

 

In case readers of the rule are confused about what a “family planning organization” might be, a footnote (on page 7 of the rule) links to a Bloomberg Businessweek story entitled, “Why It’s So Hard to Run an Abortion Clinic,” which bemoans the difficulties a Kansas abortion provider supposedly faced in getting credit from a bank. Not to put too fine a point on it, OCC Acting Comptroller Brian Brooks and chief economist Charles Calomiris wrote in a Wall Street Journal op-ed: “Many of the targeted industries are those unpopular on the political left. But we’ve also heard allegations of banks being pressured to cut off programs and business disfavored on the right, such as Planned Parenthood.” Under the proposed rule, banks could no longer pay attention to such outside criticism of such a business and must approve a loan or other financial service if it meets an unspecified “safety and soundness” criteria.

 

Not only would this rule give short-shrift to the freedom of conscience that conservatives found so important in Hobby Lobby and other instances, it would create a mound of red tape for banks regardless of their rationale for rejecting certain loans. In many cases, bank officials could have a low personal opinion of an industry as well as valid business reasons for denying a loan. As the Bloomberg Businessweek article on the abortion clinics notes, “Lenders may have rejected [the abortion clinic’s] loan applications because of abortion stigma or legitimate financial concerns; it’s often hard to disentangle the two.”

 

The difficulty of disentangling personal opinion from business concerns raises questions as to how regulators would enforce this rule. How could they attempt to prove that a loan was rejected based on the prospective borrower’s beliefs? In the case of an abortion clinic, they may look at whether any of the bank’s employees or directors were members of pro-life groups. In the case of a loan rejection for a socialist website, they may look at whether bank personnel donated to conservative or libertarian think tanks. The rule could result in highly invasive probes that would have a chilling effect on involvement in civic activity by thousands of bank employees and directors.

 

There’s another reason advocates for industries targeted by the Left are making a bad bet if they support this rule. Under a Biden administration, the rule could be easily turned on its head and used as a cudgel to force banks to make loans to wind farms, ethanol producers, and other makers of products and services deemed to fit a “Green New Deal.” Meanwhile, since banks are also required under this rule to consider “compliance with laws and regulations” in providing a financial service, they could likely still deny loans to many “unwoke” industries based on new legislation or regulation targeting products such as oil, gas, and guns. So this rule, in combination with other new laws and regulations that may be ushered through the Biden administration, could turn into just another instrument in the tool box to nudge or shove businesses to pursue ESG — the agenda of environmental, social, and governance goals as defined by the Left and radical Greens.

 

There are ways to deal with “woke capitalism” that don’t infringe on freedom of conscience and don’t carry the danger of being reverse-engineered for use against conservatives. The first is to get rid of programs such as the now-defunct Operation Choke Point, in which the government — rather than private groups — pressures financial firms to cease dealings with certain businesses. The Trump administration should be applauded for getting rid of Choke Point, which began under the Obama administration.

 

Second, conservatives and free-marketeers who own shares in publicly traded companies can form their own shareholder-advocacy groups to counter pressure on corporations from the Left. They can exert their own powers of persuasion to corporate executives not to bow to “woke” demands. The Free Enterprise Project of the National Center for Public Policy Research provides an excellent example of how this can be done.

 

The most important policy to curb “wokeness” in banking is for both Congress the regulatory agencies to clear away the red tape that blocks competition from new banks, credit unions, and fintech firms. Having multiple sources of financing for businesses limits the power of “wokesters” to pressure firms. The OCC, under Trump appointee Brian Brooks and former acting comptroller Keith Noreika, has commendably tried to lift regulatory barriers through initiatives like fintech charters. Brooks should continue these deregulatory policies and withdraw the misguided “fairness” rule that would add nothing but new red tape and a new tool for the “woke” mob.