August 3, 2020
RE: Advance Notice of Proposed Rulemaking – National Bank and Federal Savings Association Digital Activities [Docket ID OCC-2019-0028; RIN 1557–AE74; 85 FR. 40827]
As numerous civil rights and racial justice organizations have highlighted, changes to the Office of the Comptroller of the Currency’s (OCC) regulations on digital activities are likely to have far-reaching consequences as it regards economic and racial equity. Specifically, these changes risk leading to disparate impact, “digital redlining, “predatory inclusion,” and enhanced surveillance. Given the seriousness of this rulemaking’s potential consequences, the OCC should do all that it can to ensure that the public has the utmost confidence in the integrity of the rulemaking process. Sadly, in allowing that process to move forward under the leadership of an acting official with severe conflicts of interest, the Office is rendering public trust in it impossible.
Prior to joining the OCC in April, Brian Brooks served as the Chief Legal Officer at Coinbase, a cryptocurrency exchange which had previously lobbied the Office for a National Bank Charter. Since assuming his role, Brooks has taken a handful of steps to “manage” this clear conflict of interest. Brooks liquidated $4.6 million in Coinbase stock, according to a financial disclosure report that was made public in June. The news outlet Bloomberg reported that Brooks also submitted “a letter through the agency’s ethics office outlining companies he’ll steer clear of because of potential conflicts of interest, including Amazon.com Inc., Bank of America Corp.’s Merrill Lynch unit, Coinbase and a number of other tech firms he’s worked with.”
There is, however, reason to question the integrity of these controls given the material weaknesses in the federal government’s ethics regime that have come to light over the last several years. The OCC officials tasked with monitoring and enforcing the Office’s ethics rules are not housed within an independent office and, as such, are not shielded from leadership’s influence. In addition, Brooks’ ethics agreement does not appear to be publicly available, foreclosing any possibility of public scrutiny compelling compliance. Under these circumstances it is also impossible for members of the public to independently assess the adequacy of the agreed upon measures.
Even without seeing the specific promises that Brooks has made, however, it is possible to say with certainty that he has not mitigated all of his conflicts of interest. As an acting official, Brooks is not bound to the Trump administration’s ethics agreement that would limit his ability to lobby on Coinbase’s behalf after leaving government service. There is, therefore, nothing stopping Brooks from shepherding through a major rule change to benefit his former employer before returning to that employer’s payroll next year. Signed just one week after he took office, the President’s executive order on ethics was a clear administrative priority, one meant to show the new administration’s commitment to cleaning up Washington corruption. President Trump touted the ban’s strength relative to past administrations’ stating, “This is a five-year lobbying ban. It’s [Obama’s ethics order] a two-year ban now, and it’s got full of loopholes, and this is a five-year ban.” Therefore, by the President’s own admission, allowing this rulemaking to proceed under the current leadership would represent serious cause for concern.
The decisions before the OCC are serious ones, warranting careful consideration untainted by expectations of personal profit. In light of Brooks’ lack of transparency and unmitigated conflicts of interest, there is no way for this rulemaking process to earn the public’s trust while Brooks remains at the helm. We strongly suggest that the matter be closed until such time as a permanent official who lacks Brooks’ many conflicts be confirmed.
Revolving Door Project at the Center for Economic Policy and Research (CEPR)
1611 Connecticut Ave, Suite 400
Washington, DC 20009