Donald Trump on Thursday signed an executive order aimed at preventing banks from denying financial services to individuals or organisations based on political or religious beliefs — a practice critics call "debanking".
The order instructs federal regulators to scrutinise banks under their supervision for both current and past practices that may have excluded customers for non-financial reasons, and to impose penalties or disciplinary measures where necessary. It also gives agencies the authority to refer such cases to the Justice Department for potential civil action.
Regulators have been given 180 days to complete their reviews of both bank conduct and their own internal policies. The order further mandates that regulators purge any rules or practices that may inadvertently discourage banks from offering services based solely on customers’ political or religious affiliations.
The move aligns with long-standing concerns voiced by conservative groups and politicians, who allege ideological bias in banking decisions. In recent months, US conservatives have mounted increasing pressure on the financial sector, accusing banks of arbitrarily denying services to right-leaning individuals and groups.
“This order places new pressure on existing policies that banks use to close or deny accounts,” an expert commented. “Most banks already have internal protocols focused on money laundering and solvency risks — this introduces a political and regulatory overlay.”
The executive order was broadly anticipated by the industry, which had been bracing for formal regulatory intervention amid political scrutiny.
While critics say financial institutions are engaged in selective debanking, major banks deny making decisions based on clients’ political views. JPMorgan Chase, in response to Trump's recent claim that the bank refused to accept his deposits after his first term, said it does not close accounts for political reasons. Bank of America, which Trump also named, declined to comment on individual client matters but said it supports clearer regulatory guidance.
Large lenders have previously pushed back against suggestions of bias, arguing instead that ambiguous rules and regulatory overreach often force them to err on the side of caution. The industry has long sought more specific guidelines from regulators on compliance expectations.
In a joint statement, the Bank Policy Institute, American Bankers Association, Consumer Bankers Association and Financial Services Forum welcomed the executive order and criticised what they termed “runaway regulations”.
“It’s in banks’ best interest to take deposits, lend to and support as many customers as possible. Unfortunately, regulatory overreach, supervisory discretion and a maze of obscure rules have stood in the way,” the statement said.
The order follows earlier moves by Trump-appointed regulators to ease oversight. This year, all three major federal banking regulators announced they would stop enforcing so-called “reputational risk” standards — a framework that allowed supervisors to penalise banks for engaging in otherwise legal activities that might bring public criticism or litigation.
Banks have argued that the reputational risk rule was too subjective and allowed regulators to arbitrarily prevent institutions from servicing certain industries or individuals.
The industry is also pressing for updates to anti-money laundering laws, which currently permit banks to shut down accounts deemed suspicious without disclosing reasons. Bankers contend that such rules, while aimed at curbing illicit finance, often create compliance burdens and result in unjustified account closures.
“Such practices are incompatible with a free society and the principle that banking services should be based on material, measurable, and justifiable risks,” the order stated.
