Executive Summary
- What is new: President Trump has signed an executive order targeting “debanking.”
- Why it matters: The executive order represents a significant escalation and increased enforcement risk to financial institutions due to past debanking practices.
- What to do next: Financial institutions should consider reviewing current and past practices — including underwriting and eligibility criteria as well as complaints — to assess risk associated with the executive order and with existing federal and state laws.
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On August 7, 2025, President Donald Trump signed an executive order targeting “debanking” — the denial of banking or financial services based on political or religious beliefs, or the perceived risk of lawful industries.
The executive order, “Guaranteeing Fair Banking for All Americans” (the EO), directs federal banking regulators to identify financial institutions that have engaged in unlawful or politicized debanking and authorizes enforcement actions against them.
While federal financial institution regulators have taken other actions recently to address related concerns, the EO represents a significant escalation and increased enforcement risk to financial institutions due to past debanking practices.
In light of these developments, financial institutions may wish to consider reviewing current and past practices — including underwriting and eligibility criteria as well as complaints — to assess risk associated with the EO and with existing federal and state laws.
For global banks operating in the U.K. and other jurisdictions that have sought to address debanking practices, consideration should also be given to account termination requirements, including notification requirements and the reasons provided when customer accounts are terminated.
Regulatory Directives
Along with the accompanying fact sheet, the EO describes a backdrop of prior regulatory initiatives and instances of debanking. Examples it provides includes the Obama-era “Operation Chokepoint” and efforts under the Biden administration focused on the digital assets industry.
The EO also states that financial institutions declined services to the Trump organization, “MAGA”-affiliated applicants and certain other institutions for political reasons.
The EO announces a federal policy that “no American should be denied access to financial services because of their constitutionally or statutorily protected beliefs, affiliations, or political views,” and that financial institution decisions “must instead be made on the basis of individualized, objective, and risk-based analyses.”
The EO broadly targets “politicized or unlawful debanking,” defined as acts that:
directly or indirectly adversely restrict access to, or adversely modify the conditions of, accounts, loans, or other banking products or financial services of any customer or potential customer on the basis of the customer’s or potential customer’s political or religious beliefs, or on the basis of the customer’s or potential customer’s lawful business activities that the financial service provider disagrees with or disfavors for political reasons.
Key regulatory directives in the EO include:
- Reputation risk. Regulators are to eliminate the use of “reputation risk or equivalent concepts” as a factor in banking decisions and in related guidance documents, manuals and other supervisory materials.
- Affected SBA customers. The Small Business Administration (SBA) shall send notices to financial institutions requiring that, by December 5, 2025, they identify, notify and reinstate customers or potential customers that were denied financial, payment processing and other services due to politicized or unlawful debanking in violation of SBA statutory or regulatory requirements.
- Comprehensive debanking strategy. By February 3, 2026, regulators must develop a “comprehensive strategy for further measures to combat politicized or unlawful debanking” across the federal government.
- Investigations and enforcement. Federal banking regulators must review financial institutions under their supervision by December 5, 2025, to identify past or current policies or practices that may have resulted in politicized or unlawful debanking. Regulators are tasked with taking “appropriate remedial action,” including fines and other disciplinary measures, against institutions found to have violated federal laws such as the Equal Credit Opportunity Act (ECOA), the Federal Trade Commission Act and the prohibition against unfair, deceptive and abusive practices in the Consumer Financial Protection Act.
- Complaints and DOJ referrals. Federal banking regulators shall review supervisory and complaint data to identify financial institutions that have engaged in unlawful debanking based on religion in violation of ECOA. If unable to obtain voluntary compliance, regulators are to refer the financial institution to the Department of Justice (DOJ) for enforcement.
As noted above, concerns regarding debanking have been expressed previously, and such practices may violate existing federal law. In addition, various state laws may be implicated by debanking practices, including those prohibiting discrimination based on an applicant’s lawful source of income.
States such as Florida, Tennessee and Idaho have also recently enacted laws prohibiting discrimination based on speech, expression, political affiliation, certain beliefs, involvement in certain industries as well as impermissible debanking.
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