President Trump signed Thursday an executive order taking aim at alleged discrimination against conservatives by large banks, directing regulators to investigate and punish financial institutions for “politicized or unlawful debanking.”
Conservatives have long complained that they have been unfairly treated by the banking system, a cause taken up by Trump in his second term.
“Financial institutions have engaged in unacceptable practices to restrict law-abiding individuals’ and businesses’ access to financial services on the basis of political or religious beliefs or lawful business activities,” Thursday’s order reads.
“Such practices are incompatible with a free society and the principle that the provision of banking services should be based on material, measurable, and justifiable risks,” it continues.
The order directs banking regulators to investigate and punish financial institutions for debanking as violations under consumer protection laws and the Equal Credit Opportunity Act.
It also calls on the Small Business Administration (SBA) to instruct the institutions it oversees to identify and reinstate any clients denied services through a “politicized or unlawful debanking action.”
Banking regulators are also directed to remove “reputation risk” from guidance used to examine financial institutions, in addition to rescinding or amending regulations that also consider reputation.
The issue of debanking — the closure of accounts that banks consider risky, often with little notice or explanation — appears to have taken on a personal note for Trump, who said earlier this week that he was turned away from several major banks, including JPMorgan Chase and Bank of America.
“I’ll give you me as an example,” he told CNBC Tuesday. “I had hundreds of millions. I had many, many accounts loaded up with cash, loaded up with cash, and they told me, ‘I’m sorry sir, we can’t have you. You have 20 days to get out.’”
Concerns about debanking initially emerged on the right in the wake of “Operation Choke Point,” an Obama-era initiative that discouraged banks from working with “high-risk” clients, including firearm dealers and payday lenders.
Debanking has received new attention in recent months, as the crypto industry has also alleged it was unfairly denied access to the banking system.
The industry cheered both the debanking order and a second order signed by Trump on Thursday, allowing 401(k) investors to access crypto, private equity, real estate and other digital and alternative assets.
“Ending the discriminatory practice of debanking lawful crypto companies sends a clear message: the era of ‘reputation risk’ being used to justify financial exclusion is over,” Blockchain Association CEO Summer Mersinger said in a statement.
She also touted the 401(k) order for “expanding consumer choice and empowering individuals to responsibly build wealth using some of the best-performing assets of the past decade.”
