Quote (inkanddagger @ Mar 19 2019 07:21pm)
@bogie, I have to go back to this again, because I don't think you'll get what I just wrote
(being small picture minded and all).Environmental risk has been on the radar for lenders since at least the Nixon era, when courts began forcing some measure of responsibility on banks for the polluting factories, Superfund (CERCLA) sites and other environmental problems that had, to one degree or another, been facilitated by their financing. Congress passed laws in 1996 that limited the exposure of lenders on this front.
So AOC's line of questioning is important because it highlights the damage done after the shift in policies in the late 90s.
Back in the Nixon era it was easy to decide not to lend if, for example, your potential borrower is dumping cyanide in a river.
But if they’re dumping carbon dioxide into the air for example (not exactly illegal yet) it makes the decision more difficult. Banks are in kind of a quandary because they are competing for business and they risk allowing other banks to take that business if they self-impose regulatory standards.
So what AOC is setting up is a legal framework to bring lenders themselves into compliance with environmental standards akin to those they were used to before 1996, but now with an emphasis on the climate crisis (sure, pipeline spills are also underlying this conversation but let's not insult each other's intelligence, targeting pipelines is about production and ultimately the climate).
This clarifies and codifies lending standards, and prevents unfair competition from "tethered" banks... so it also protects capitalist/market interests while protecting the environment.
So it's really quite a brilliant move that is 100% in line with the goals of social democracy (protecting capitalism while increasing regulatory standards and quality of life).
I don't agree with her on that protecting capitalism bit and think the banks should truly be made to suffer, but folks like yourself should appreciate her brilliance in protecting the market economy and big banks you all love.
Edit: I would love for you to read this, but at least please skim it (it's quite long and you may not be able to comprehend all if it, unfortunately):
https://www.lexisnexis.com/lexis-practice-advisor/the-journal/b/lpa/posts/lender-liability-under-environmental-laws-in-real-estate-transactionsOuch, looks like I really touched a nerve there.
I read the entire thing hoping for some fantastic insight, but I left disappointed. Perhaps you might want to reread it and let me know where you think Wells Fargo is running afoul of lender liability laws.
AOC believes that the bank is/ought to be legally liable for the operations management / operations mishaps of the borrower. Obviously, legally not the case. Wells Fargo is not acting in a management capacity, and has presumably followed the legal & regulatory protocols in place.
So we assume she knows this, and is saying "ought". The consequence of applying legal liability to the lender is to curtail lending, as the lender has limited expertise and no control over the operations of the borrower. With no control over operations, and unbounded legal and financial responsibility, even well-funded lenders would find it hard to finance projects that carried any sort of risk.
Worse, a similar result could be realized by passing stricter regulation on the borrower, and punishing the borrower when operations mistakes are made. All as an aside, you have to wonder where this ends. If lenders are legally liable for operations mishaps as it impacts the environment, is the same true for other workplace hazards? Product recalls? Of course, because I can't even begin to see how you differentiate them as issues.
If your goal is to target production, target production. Outlaw oil and let's face the catastrophic financial costs honestly. Adding enormous financial and legal costs to lending is throwing the baby out with the bathwater.
This post was edited by bogie160 on Mar 20 2019 04:56pm