Alaska Gov. Mike Dunleavy said his administration will introduce legislation requiring state departments and agencies to end existing relationships and partnerships with financial institutions that have chosen to stop financing oil and gas exploration and development in the Arctic.
“We are the only arctic state in the nation. For over 40 years, the United States has benefited greatly from exploration and development of our arctic resources,” Dunleavy said in a Dec. 14 statement. “It makes no sense for Alaska to allow financial institutions to benefit handsomely from Alaska’s financial activities on one hand, while working against our interests on the other.”
Dunleavy’s action aims to put some financial teeth into the consequences for lending discrimination across a wide, strategically and financially important swath of the state.
The federal Office of the Comptroller of the Currency has put offending banks on notice that red-lining arctic or energy lending is inconsistent with the Dodd–Frank Act mandate.
An OCC investigation found that major banks had indeed engaged in such discrimination during 2019 and 2020. In response, the office proposed a rule Nov. 20 directing fair access to banking services.
The Goldman Sachs Group Inc. initiated the controversy in late 2019, announcing it would decline to finance any new arctic oil exploration or development. Other major U.S. and international banks - including JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co. and Swiss bank UBS - followed with similar announcements.
Dunleavy said oil and gas exploration in the Arctic has benefitted Alaska and the country with “thousands of jobs and billions of dollars in revenue.”
“Alaska’s environmental standards for oil and gas development are widely considered among the best in the world,” Dunleavy said. “Other states, and even other countries have reached out to the State of Alaska to learn how to explore and produce oil and gas reserves safely and responsibly.”
The OCC said large banks influence the price of financial services, and only the largest have the diversified balance sheets and sophisticated risk management systems to serve certain industries.
“It is fair to place particular responsibilities on the largest banks because their systemic importance often results in their receiving assistance and favorable treatment from the government during periods of financial distress,” the OCC said.
“If a group of financial institutions want to make a political statement with their investment strategy, that is their prerogative - but if Alaska does not have a robust oil and gas industry our future is not bright,” Dunleavy said. “It is my job to protect Alaska and its economic future.”
- STEVE SUTHERLIN
