At Townhall: Canada Isn’t Alone in Using Debanking As a Weapon Against Political Opponents

Feb 23, 2022 | op-ed

Dr. John Lott has a new piece at Townhall.

Canada may be the future for many Americans. The Canadian government is freezing the bank accounts of truckers involved in the freedom protest. But on Thursday, they went even further, freezing the bank accounts and blocking credit cards and crypto wallets for people and institutions in Canada who donated to support the truckers. Without credit cards or checks and no access to financial institutions, people better hope that they have lots of cash at home.

This is being done even without court orders.

It is bad enough that financial institutions freeze donors’ accounts. Still, to get an idea of how extreme this is, they are punishing people who donated to the truckers even before the Trudeau government condemned the truckers’ actions. 

But this isn’t just something that happens in our neighbor Canada. Indeed, Biden is using all the regulatory tools at his disposal to “debank” those industries he doesn’t like. Biden’s nominee to be the Federal Reserve’s vice chair for supervision has repeatedly urged regulators to force banks to defund America’s domestic oil and gas industry. That position would give her the power to do just that.

At the end of January, the U.S. Securities and Exchange Commission (SEC) announced that it will use its regulatory authority to scrutinize how credit rating agencies compile “environmental, social, and corporate governance (ESG)” evaluations of companies. Right at the top of these regulators list of “socially” irresponsible companies are gun makers and sellers. A lower credit rating means companies have to pay higher interest rates and higher business costs. According to news reports from last week, the SEC is currently debating how far to push these regulations.

Late last fall, Biden’s then-nominee to head the Office of the Comptroller of the Currency, Saule Omarova, came out in favor of using the “debanking” of what she called “socially sub-optimal industries.” Omarova’s other controversial views caused her nomination to be withdrawn, but other parts of the Biden administration are moving forward.

Some credit rating agencies are pushing back. Kroll Bond Rating Agency has pushed back against the SEC regulations, saying that its credit ratings “does not deploy subjective value-based ESG scoring rubrics.” But even putting aside the possible civil and criminal charges, no financial institution wants extra audits or investigations from regulators. 

These ESG ratings are also going to be used for Federal acquisition decisions. Last fall, the Biden Labor Department “may often require an evaluation of the economic effects of climate change and other ESG factors on the particular investment or investment course of action” for workplace retirement plans —401(k)s and 403(b)s. What that means is that Biden could force retirement accounts to trade-off goals they view as socially desirable in exchange for accepting a lower rate of return on investments.

Biden wants to revive Obama’s Operation Chokepoint. Obama had government agencies warn the financial institutions they regulated that the government considered certain types of their customers “high risk,” such as those in the fossil fuels and firearms industries. Trump killed the program, and in one of the last actions of his administration, he tried to implement rules that would prevent Obama’s Operation Chokepoint from being implemented again. He wanted to prevent the federal government from discriminating against law-abiding companies producing legal products, but Biden killed the reform. 

One could debate whether we should have a natural gas or oil industry. But Biden can’t claim that he wants to reduce gas and heating oil prices at the same time he is working to destroy production in the U.S. One could debate whether Americans should be able to have guns for personal defense. But as he works hard to put gun makers and sellers out of business, Biden can’t claim that he supports the Second Amendment. We can’t ignore that the people who benefit the most from owning guns are the most likely victims of violent crime – poor blacks in high-crime urban areas. 

So, the Democrats destroy the businesses that they don’t like. Instead of Republicans stopping this discrimination, should they start discriminating against the companies that Democrats like? 

Of course, the Obama administration showed how the government could financially choke off his political opponents. His administration used the IRS against their political opponents, preventing them from being classified as non-profits, and thus preventing them from raising money.

Similarly, last Thursday, Canada’s Justice Minister David Lametti warned members of “a pro-Trump movement” should be particularly “worried” that the government is coming after them. Trump is not a Canadian politician. Trump didn’t have anything to do with the Freedom Convoy. To so explicitly target political opponents for destruction is scary.

As Biden continues to implement these policies and the prices of gas and guns rise, he can’t just blame it on these companies suddenly becoming greedy.

John R. Lott, Jr., “Canada Isn’t Alone in Using Debanking As a Weapon Against Political Opponents,” Townhall, February 23, 2022.