There is an interesting case out of Perkins, Oklahoma where Federal Reserve officials reportedly ordered a small bank (The Payne County Bank) to remove religious Christmas displays. I fail to see the authority of Federal Reserve officials to limit the free speech to a bank, particularly religious-based speech. If the bank wants to marginalize non-Christian customers through sectarian displays, I think it has a constitutionally protected right to do so. What it cannot do is actually discriminate in the establishment or handling of accounts.



Federal Reserve examiners reported came for one of their visits (every four years) and saw a posted daily Bible verse, hanging crosses, and buttons saying “Merry Christmas, God With Us.” There was also a Bible verse on the Internet. All were ordered removed by the federal examiners.

The action is based on the Federal Reserve’s “Non-Discouragement” rule contained in Title 12 (Section 202.4). The same section as an anti-discrimination policy:

§ 202.4 General rules. (a) Discrimination. A creditor shall not discriminate against an applicant on a prohibited basis regarding any aspect of a credit transaction. (b) Discouragement. A creditor shall not make any oral or written statement, in advertising or otherwise, to applicants or prospective applicants that would discourage on a prohibited basis a reasonable person from making or pursuing an application.

Regulation B further states:

Regulation B Sec. 202.1 Authority, scope and purpose. (b) Purpose. The purpose of this regulation is to promote the availability of credit to all creditworthy applicants without regard to race, color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract); to the fact that all or part of the applicant’s income derives from a public assistance program; or to the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The regulation prohibits creditor practices that discriminate on the basis of any of these factors. The regulation also requires creditors to notify applicants of action taken on their applications; to report credit history in the names of both spouses on an account; to retain records of credit applications; to collect information about the applicant’s race and other personal characteristics in applications for certain dwelling-related loans; and to provide applicants with copies of appraisal reports used in connection with credit transactions.

The discouragement provision is hopelessly vague and ambiguous. Most anything could discourage some people. I would be discouraged to see a bank displaying White Sox testimonials rather than loyalty to the Cubs. Moreover, there is no apparent requirement of intent. I have not read any report that the bank preferred only Christian customers, alone actively sought to exclude non-Christians. Discriminating on the basis of religion is a “prohibited basis,” but displaying religious text or symbols is not prohibited for a private company. Section (a) is perfectly understandable and should suffice in this regard. Any active effort to deny service to non-Christian would be a form of prohibited discrimination.

I don’t like sectarian messages in banks. (I prefer a demonstration of economic knowledge rather than blind faith from my bankers). However, I find it deeply troubling to see federal examiners branching out into speech regulation. I would think that they have enough to do with banks failing across the country in this economy.

In an update, the Feds have backed down on the postings after a call from the president of Payne County Bank, Lynn Kinder. I remain, however, a bit concerned about the claimed authority here. Clearly, this regulation has not been challenged and I wonder how many of banks have simply complied with such speech limitations. There remains a troubling regulation on the books and regulators who believe that they have the right to demand the removal of such displays.

On its website, today’s biblical quotation is

Luke 2:1, 4-5 “[The Birth of Jesus] In those days Caesar Augustus issued a decree that a census should be taken of the entire Roman world.”

A survey of the entire Federal Reserve actions under the non-discouragement policy might also merit a decree or two.

Jonathan Turley

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