President Trump is righting a dangerous wrong created by the Left: debanking. Debanking in today’s current climate means the practice of shutting out lawful—largely conservative and religious—customers and businesses from financial services through government pressure on banks.
This month, President Trump signed an executive order called “Guaranteeing Fair Banking For All Americans,” which rolls back this recent troubling government push against disfavored customers for their political or religious beliefs.
“It is the policy of the United States that no American should be denied access to financial services because of their constitutionally or statutorily protected beliefs, affiliations, or political views, and to ensure that politicized or unlawful debanking is not used as a tool to inhibit such beliefs, affiliations, or political views,” President Trump’s executive order states. “Banking decisions must instead be made on the basis of individualized, objective, and risk-based analyses.”
President Trump’s executive order references Operation Chokepoint, a dubious push by the Biden administration to coerce banks into stripping banking access away from lawful businesses that Team Biden found distasteful, from firearms to fossil fuels.
In practice, that meant, as the Committee to Unleash Prosperity estimates, some 5,000 federal bank regulators “were weaponized against Biden’s enemies.”
In March 2023, Silicon Valley Bank (SVB) collapsed, the third-largest bank failure in United States history. In May this year, U.S. Deputy Treasury Secretary Michael Faulkender suggested in a speech that the negative cascading effects of SVB came in part due to banking regulators focused on myopic distractions like debanking and targeting disfavored industries rather than addressing bigger, systemic risks. Faulkender said:
There is perhaps no better recent case study for this point than the bank failures in spring 2023. A careful review of those bank failures underscores how centering supervision on management and other governance matters can distract examiners and banks’ risk managers from the real risks to safety and soundness.
The associated mission drift can lend itself to political ends, as we saw with the focus on climate risk and the debanking of disfavored industries. Treasury wants our banking agencies’ supervision to be re-focused on material financial risks, which will ultimately enhance safety and soundness, reduce compliance costs, and remove obstacles to banks’ responsible lending and risk taking.
The Treasury Department intends to drive a change in the culture of supervision through improvements to examination procedures and enhanced monitoring of examiners’ compliance with those procedures.
President Trump’s executive order directs federal banking regulators “to the greatest extent permitted by law, remove the use of reputation risk or equivalent concepts that could result in politicized or unlawful debanking as well as any other considerations that could be used to engage in such debanking, from their guidance documents, manuals, and other materials.”
No matter who is in the White House, lawful Americans of all backgrounds deserve access to financial services. Kudos to President Trump for righting this wrong.