Executive order will also target banks for dropping clients over politics
President Donald Trump is expected to sign an executive order directing federal regulators to eliminate Obama-era guidelines that pressure banks to deny services to conservative groups. It also calls to punish banks that drop customers because of politics.
The executive order could come as soon as this week, the Wall Street Journal reported after reviewing a draft.
“Conservatives for years have accused banks of denying them services on political or religious grounds, and cryptocurrency companies have said they were shut out of banking services under the Biden administration,” the Journal reported.
The guidelines originated in 2011. They urge banks to consider the “reputational risk” of clients, an “inherently subjective” standard that “allows regulators biased against certain industries (such as gun manufacturers or cryptocurrency firms) to grade those industries as too risky,” according to the America First Policy Institute.
The 2011 guidance laid the groundwork for Operation Choke Point, an Obama Justice Department initiative launched two years later that pressured banks to cut off services to firearms dealers, payday lenders, online gambling platforms, and other legal businesses.
While Trump ended Operation Choke Point in 2017, the Biden administration in 2022 reimposed similar policies on the banking and cryptocurrency industries. In early 2021, Biden officials also dismissed the Trump-proposed “Fair Access to Financial Services” rule, which aimed to prohibit banks from denying services based on subjective factors.
In addition to the executive order, a recently released white paper from the America First Policy Institute calls for legislative actions to codify regulatory changes, like eliminating the “reputational risk” standard.
“A more permanent solution is needed,” the report states. “Whether the result of politically driven regulators abusing their authority or bad policies, this administration and Congress have an opportunity to dramatically curb the practice of government-driven debanking across the country through federal action. Doing so involves reducing subjectivity and instituting these changes into law.”
Financial institutions have welcomed the Trump administration’s move.
“This is a step in the right direction,” a JPMorgan spokesperson said in a statement shared with the Washington Free Beacon. “Preventing regulatory overreach and reforming laws that have led to debanking are welcome efforts.”
