Federal authorities urged to investigate claims of banking bias towards conservatives under Trump's command
In a move to address concerns over perceived discrimination in the banking sector, former President Donald Trump signed an executive order in August 2025, directing federal regulators to investigate potential instances of discrimination against political conservatives and specific industries, such as gun manufacturers and cryptocurrency companies.
The term "debanking" refers to banks closing accounts or refusing to do business with individuals or companies. Historically, this practice has been justified as a means of protecting banks from financial, legal, or reputational risks associated with certain industries or activities.
Trump's executive order mandates federal bank regulators to investigate and refer cases of alleged discrimination to the Department of Justice, remove the concept of "reputational risk" from official banking guidance, and ensure financial service access is not denied based on constitutionally or statutorily protected beliefs, affiliations, or political views.
The order follows accusations that major banks, including JPMorgan Chase and Bank of America, have debanked certain individuals or companies for political reasons. However, both banks have denied these allegations, citing adherence to federal regulations and risk assessments rather than politics as the basis for their actions.
The debate highlights tensions between banking regulatory policies, free expression, political affiliation rights, and the banks’ risk management strategies. People and businesses affected by debanking may lose the ability to hold bank accounts, process payments, or participate fully in economic activities, leading to claims of discrimination harming livelihoods and freezing payrolls.
Sen. Tim Scott of South Carolina has introduced legislation that would require bank regulators to no longer consider reputational risk as a factor in measuring a bank's health and risk profile. This move could open banks to potential civil or criminal investigations, fines, or other punishments if they are found to be in violation of the Equal Credit Opportunity Act, which bans banks from discrimination based on race, ethnicity, religion, sex, and other protected statuses.
While the banking sector denies systematic bias, the executive order aims to curb the use of "reputational risk" as a broad justification and enforce fair banking access based on objective risk assessments rather than political or religious considerations. The order is a response to concerns raised by conservatives and some cryptocurrency executives that "reputational risk" has become a catch-all to exclude them unjustly.
The Obama administration's government-directed debanking has been a rallying cry for conservatives, with Operation Chokepoint being a notable example. This federal initiative targeted certain lawful industries, including firearms dealers and payday lenders, leading to accusations of government-driven debanking based on political considerations. Though officially ended, concerns over government-directed debanking practices remain.
In summary, Trump's executive order targets alleged discrimination against conservatives and certain industries by banks, mandating a probe into potential instances of discrimination and aiming to curb the use of "reputational risk" as a justification for such practices. The order could lead to changes in banking regulations and potentially open banks to investigations, fines, or other punishments if they are found to be in violation of anti-discrimination laws.
- The government has taken action to address allegations of discrimination in the financial industry.
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