Trump signs executive order to combat politicized banking practices

Investing.com -- President Donald Trump signed an executive order on Thursday aimed at preventing financial institutions from denying services based on political or religious beliefs, or lawful business activities.

The order directs federal banking regulators to remove concepts like "reputational risk" from their guidance and examination materials that could enable what the administration calls "politicized or unlawful debanking."

Under the order, the Small Business Administration must require financial institutions under its jurisdiction to make efforts to reinstate clients previously denied services due to unlawful debanking.

The Treasury Secretary, in consultation with the Assistant to the President for Economic Policy, is directed to develop a comprehensive strategy to combat such activities, including potential legislative or regulatory solutions.

Federal banking regulators are required to review financial institutions for policies encouraging politicized debanking and take remedial actions, which may include fines or consent decrees. They must also review supervisory data for instances of unlawful debanking based on religion and refer such cases to the Attorney General.

The White House cited several examples of what it considers unfair banking practices, including a major banking institution that denied ticket-payment processing services for a Republican event until the decision received public attention.

The administration also claimed federal regulators encouraged banks to flag individuals for transactions with companies like Bass Pro Shop or Cabela’s, or for using terms like "Trump" or "MAGA" in peer-to-peer payments without evidence of criminal activity.

President Trump has previously stated that two major banks denied his own business and that banks "discriminate against conservatives" and "against religion."

The order follows a Senate Banking Committee hearing earlier this year where witnesses shared firsthand experiences of being debanked.

The administration also referenced "Operation Chokepoint," describing it as a "well-documented Federal debanking initiative" that targeted lawful industries for political reasons, and noted that the digital assets industry has also faced debanking initiatives.

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