Key Takeaways
President Trump issued an executive order prohibiting financial institutions from debanking based on political or religious beliefs and lawful business activities.
The order also addresses banking restrictions faced by crypto companies, requiring federal regulators to review and remediate discriminatory policies.
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President Donald Trump on Thursday issued an executive order that seeks to prevent financial institutions from cutting off accounts or services based on political, religious biases, or lawful business activities.
The order is aimed at ensuring fair access to financial services for all Americans. It focuses on eliminating discriminatory ‘debanking’ practices and enforcing objective, risk-based banking policies.
As part of the directive, federal banking regulators, such as the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve (Fed), must remove “reputational risk” language from guidance, manuals, and policies.
Language has been historically used to justify cutting off lawful but controversial clients. However, some banks have allegedly used it as a cover for politically or religiously motivated account closures. The order aims to prevent this from being used as a cover for discriminatory practices.
Similar concepts that could enable politically motivated account closures must also be removed.
The order directs the Small Business Administration to push for the reinstatement of clients previously denied services due to unlawful debanking.
The Treasury Secretary is tasked with developing a comprehensive strategy to combat debanking activities, while federal regulators are instructed to review financial institutions for discriminatory policies and take remedial actions, including potential fines or consent decrees.
“The banks discriminate against conservatives, they discriminate against religion, because they’re afraid of the radical left, I suspect,” Trump said. “Nobody knows the banking industry better than me, and I’m not going to let them take advantage of you any longer.”
The order responds to several reported incidents, including a major bank’s denial of ticket-payment processing for a Republican event. Federal regulators were found to have encouraged banks to flag transactions with companies like Bass Pro Shop or Cabela’s, or payments using terms like “Trump” or “MAGA,” without evidence of criminal activity.
The digital asset industry has also faced similar banking restrictions. The Senate Banking Committee held a hearing earlier this year featuring testimonies from individuals who experienced account closures.
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