Bank restrictions on the financing of oil and gas drilling in the Arctic are akin to past practices —known as redlining — of not loaning to communities of color, Energy Secretary Dan Brouillette told Axios in an exclusive interview.
The big picture: A decades-long battle over Arctic drilling is suddenly escalating even as the world grapples with a pandemic. Five of America’s six biggest banks have recently announced they won’t finance oil and gas development in the Arctic, prompting conservative and industry backlash.
"For years and years and years, banks would not lend money, insurance companies would not write policies in minority areas in the country. Redlining is the term used all throughout those debates. We didn’t want banks redlining certain parts of the country. We don’t want that here. I do not think banks should be redlining our oil and gas investment across the country." —Dan Brouillette
What they’re saying: Brouillette cited his past work at USAA, a financial services firm. Experts said, though, that the redlining comparison is both inappropriate and inaccurate.
- “It’s offensive and astounding that they would go there,” said Mehrsa Baradaran, a law professor at the University of California-Irvine and an expert on redlining and racial discrimination in banking.
- “A massive corporation being cut off from a few banks is absolutely nothing like the systematic exclusion and exploitation of black communities for hundreds of years. It displays an unfortunate ignorance about the history of redlining.”
- “Redlining had to do with race and race is specifically constitutionally protected as an area you can’t discriminate against,” said Tony Fratto, a former top official in the Bush administration who's now at the public affairs firm Hamilton Place Strategies. “There is no similar protection for businesses.”
The other side: “Secretary Brouillette has zero tolerance for discrimination of any type, and he was not in any way equating the plight of minority communities to that of energy companies," Department of Energy spokesperson Shaylyn Hynes said of the redlining analogy.
"Accusing him of doing so in order to manufacture a dramatic headline is both disingenuous and not based in any truth."
- "What he did do is make the powerful point that historically there had been discrimination practiced by some in the financial services industry, a custom he and many others worked hard to eliminate and continue to oppose.”
Catch up fast: Since last December, five of America’s six biggest banks — Goldman Sachs, Wells Fargo, Citi, Morgan Stanley and JPMorgan — have announced they won’t directly finance new oil and gas development in the Arctic.
This includes specifically the Arctic National Wildlife Refuge, newly open to drilling.
Go deeper: Read the whole thing.