President Trump’s executive order, “Guaranteeing Fair Banking for All Americans,” asserts that financial institutions have denied or terminated financial services to “persons participating in activities or causes commonly associated with conservatism and the political right” and those “engaged in lawful activities and industries disfavored by regulators.” The president signed the executive order on August 7, 2025, directing the federal banking regulators to target “politicized or unlawful debanking.”
What is “politicized or unlawful debanking?”
The EO defines “politicized or unlawful debanking” as an act by a bank, savings association, credit union, or other financial services provider that adversely affects a customer’s, or potential customer’s, access to financial services based on their political or religious beliefs or lawful business activities.
The executive order states that banking decisions must be made based on “individualized, objective, and risk-based analyses” and not on a person’s beliefs, affiliations, or political views.
Importantly, the executive order covers a financial institution’s past practices, along with current and future practices. Financial institutions should take immediate action to review their policies and practices relating to the denial or termination of service and make changes in response to the executive order.
What does the executive order require the federal banking regulators to do?
“Federal banking regulators” includes the members of the Financial Stability Oversight Council that supervise banks, savings associations, and credit unions, as well as the Small Business Administration. The EO lays out several priorities for this group:
Regulatory Guidance Reform
Within 180 days of the date of the order, each federal banking regulator is directed to remove from guidance documents and other regulatory materials the use of reputation risk or any similar concept that could enable politicized or unlawful debanking. The federal banking regulators are also directed to consider amending regulations to eliminate politicized or unlawful debanking.
Regulatory Review of Financial Institutions
Within 120 days from the date of the order, federal banking regulators must conduct a review to identify any financial institution that has any past or current policies or practices that have led to politicized or unlawful debanking.
The federal banking regulators are directed to take appropriate remedial action against financial institutions found to have engaged in politicized or unlawful debanking. These actions include levying fines, issuing consent decrees, or imposing other disciplinary measures.
Within 180 days of the date of the order, federal banking regulators must review their current supervisory and complaint data to identify any financial institution that has engaged in unlawful debanking based on religion. If an identified financial institution is unable to obtain compliance under the Equal Credit Opportunity Act, the federal banking regulator will refer the matter to the Attorney General for appropriate civil action.
Small Business Administration (SBA)
The SBA is directed to notify lenders that participate in its loan guarantee program of the applicable requirements of the executive order within 60 days of the date of the order.
Within 120 days after the order, an SBA lender must make reasonable efforts to identify and reinstate any former clients and former applicants that were denied services or payment processing due to politicized or unlawful debanking.
Development by the Secretary of the Treasury of Further Measures
Within 180 days of the date of the order, the Secretary of the Treasury in consultation with the Assistant to the President for Economic Policy, must develop a comprehensive strategy for further measures to combat politicized or unlawful debanking activities.
What are the legal and regulatory considerations for financial institutions?
Financial institutions will need to have clear written policies and procedures reflecting that any decision to refuse or terminate an account must be based on individualized, objective, and risk-based standards. These policies and procedures, and a financial institution’s practices, need to be able to stand up to regulatory scrutiny, as well as potential claims by a plaintiffs’ attorneys.
Here are specific action items to prepare for regulatory scrutiny:
Review Policies and Procedures
Financial institutions should review their past and current policies and procedures. They should describe the process for reaching an objective decision to refuse or close an account. Ideally, these policies and procedures will tie the decision to another policy, such as the institution’s policy on fraud prevention, vulnerable adult protection, credit, or AML.
Document Decisions
Ensure that decisions to refuse or close an account are based on an individualized, objective, and risk-based analysis and that any decision is documented. The documentation should be created and maintained in a way that allows examiners to see how the decision was made based on objective criteria set forth in the financial institution’s policies.
SBA Programs
For a financial institution that participates in SBA programs, a process for reviewing previously denied customers or applicants should be implemented immediately – given the 120 day time requirement - to identify and reinstate any customer or applicant that was denied services or payment processing based on politicized or unlawful debanking.
Training
Ensure frontline employees are aware of the executive order and the need for greater attention to any denial or termination of service. Employees should understand that refusing or closing accounts must be based on the financial institution’s written policies and that the decision must be documented.
