In early August, President Donald J. Trump signed an Executive Order aimed at preventing financial institutions from denying or restricting services based on political or religious beliefs or lawful business activities. The measure, titled “Guaranteeing Fair Banking for All Americans,” directs federal regulators to eliminate what the administration calls “politicized or unlawful debanking.”
On September 8, the Office of the Comptroller of the Currency (OCC) followed up by issuing a bulletin to banks with guidance on how it will enforce the order, including changes to licensing decisions, oversight, and regulatory practices.
Provisions of the Executive Order
The order lays out several key directives for regulators and financial institutions:
- Reputational Risk Removed: Federal banking regulators must eliminate reputational risk and similar concepts from their manuals, guidance, and examination materials.
- SBA Oversight: The Small Business Administration is required to ensure institutions under its authority make reasonable efforts to reinstate clients who were denied services due to unlawful debanking.
- Treasury Strategy: The Secretary of the Treasury, working with the Assistant to the President for Economic Policy, will create a strategy to address politicized debanking, including potential legislative or regulatory proposals.
- Regulatory Enforcement: Banking regulators are tasked with reviewing financial institutions’ policies and past actions. Improper practices could result in fines, consent decrees, or other corrective measures.
- Religious Discrimination Cases: Complaints involving debanking based on religion must be referred to the Attorney General.
The administration argues these steps are needed to protect Americans’ constitutional rights and ensure banking decisions are based on objective, risk-based analysis rather than political or ideological factors.
Background on Debanking Concerns
The move comes after several high-profile examples of individuals and organizations being denied services:
- A major bank initially refused to process payments for a Republican event, reversing course only after public criticism.
- Regulators reportedly encouraged banks to flag customers for transactions involving companies such as Bass Pro Shops or Cabela’s, or for using terms like “Trump” or “MAGA” in peer-to-peer transfers.
- Trump has stated that two major banks declined to work with his own businesses.
- Witnesses at a Senate Banking Committee hearing earlier this year shared personal accounts of being debanked.
- Historical initiatives such as Operation Chokepoint targeted certain lawful industries for political reasons.
- The digital assets sector has also faced what critics describe as unfair banking restrictions.
Supporters of the order say these practices undermine free expression, freeze payrolls, and disrupt livelihoods for law-abiding individuals and businesses.
OCC Issues Guidance Following Executive Order
On September 8, the OCC announced additional steps to implement the order. Comptroller of the Currency Jonathan V. Gould said the agency is “taking steps to end the weaponization of the financial system” and will act against unlawful discrimination in banking.
The OCC explained that it will now weigh banks’ records on debanking practices in two areas:
- Licensing Decisions: The OCC will review a bank’s past practices and current policies when evaluating applications for new licenses.
- Community Reinvestment Act (CRA) Ratings: A bank’s record on avoiding politicized debanking will factor into its CRA rating.
In line with the president’s directive, the OCC began removing references to reputational risk from its handbooks and guidance documents in August. It also issued bulletins reminding banks of the rules governing financial record releases, suspicious activity reports, and the need to align policies with the executive order.
Looking ahead, the OCC plans to propose a rule permanently removing reputational risk language from its regulations. It will also conduct a review of supervised institutions to assess whether politicized or unlawful debanking has occurred, with corrective action to follow if needed.
A Continuing Debate
Trump has framed the issue as a matter of economic freedom, saying that banks unfairly discriminate against conservatives and religious groups under pressure from regulators. He has pledged to ensure banking services cannot be denied on ideological grounds, describing such practices as “a disgrace.”
The administration points to its termination of Operation Chokepoint 2.0 as an earlier step in curbing politically motivated restrictions, particularly against the digital assets industry.
Supporters see the executive order and OCC guidance as necessary protections for free expression and equal economic opportunity. Critics, however, are likely to raise questions about implementation, oversight, and whether federal intervention in bank-client relationships is the best path forward.
Author: Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clients’ criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jennifer’s guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
