President Donald Trump plans to sign an executive order Thursday aimed at eliminating practices by banks and their regulators that result in certain customers being denied access to financial services for ideological reasons.
The order directs federal banking regulators to remove reputational risk standards from their guidance and training materials and identify financial institutions that engaged in unlawful “debanking” in the past, according to a senior White House official who outlined the effort on the condition of anonymity.
Federal authorities are directed to impose fines or take other remedial measures they deem appropriate on institutions that are found to have had such policies.
Regulators will also be required to review complaint data, and refer instances of unlawful debanking based on religion to the Justice Department. Financial institutions under the jurisdiction of the Small Business Administration will also be required to make reasonable efforts to reinstate clients who were unlawfully denied services.
Some of the nation’s biggest banks have been accused by the Trump administration of shutting customer accounts for political or religious reasons. And many conservatives have complained that major Wall Street firms have debanked gunmakers, fossil-fuel companies, religious groups and cryptocurrency firms.
Trump is expected to sign the order alongside an action designed to increase access to alternative assets such as private equity, real estate and cryptocurrency in retirement accounts Thursday afternoon at the White House. Details of the debanking executive order were reported earlier by Fox Business.
Trump earlier this week said banks had discriminated against him in the past. JPMorgan Chase & Co. had asked him to close accounts he held for decades within 20 days, and Bank of America Corp. declined his attempt to deposit more than $1 billion, he said in a CNBC interview. Regulators in the Biden administration had been ordered to “destroy Trump,” the president said.
Both JPMorgan and Bank of America have denied rejecting business on ideological grounds.
The executive order requires the lenders to examine their processes for deciding whether to close accounts and asks regulators to remove references to so-called “reputational risk” posed by customers — a practice banks have said led to decisions not to deal with certain customers or industries.
Bank of America, the second-largest US bank, had restricted lending to companies that make assault-style guns used for non-military purposes, following shootings at a high school in Florida in 2018. Citigroup Inc. also announced its own set of restrictions for clients selling guns that year.
Bank of America went on to loosen its gun restrictions and made similar changes to its energy-lending policies, including dropping a blanket ban on financing for Arctic drilling. Then in June, Citigroup ended a seven-year policy that placed restrictions on firearms sales by its retail sector clients, citing recent legislative developments and concerns over access to banking services.
Bills have been reintroduced in Congress this year that would prohibit banks from accessing certain lending programs if they deny “fair access” to their services. The “Fair Access to Banking Act” has gained support from groups in the firearms industry.
A message from Advisor Perspectives and VettaFi: To learn more about this and other topics, check out some of our webcasts.
Bloomberg News provided this article. For more articles like this please visit
bloomberg.com.
Read more articles by Katherine Doherty, Hadriana Lowenkron
