U.S. President Trump asserts that American banks are showing bias towards conservatives, directing an investigation to scrutinize the matter further
In a move aimed at combating perceived discrimination, U.S. President Donald Trump signed an executive order on August 8, 2025, directing federal banking regulators to investigate allegations of politically motivated debanking. The order targets practices where banks close accounts or refuse service to individuals or industries based on political or religious beliefs.
The executive order mandates regulators to complete investigations within 120 days and refer cases to the Department of Justice for potential civil or criminal enforcement. The order also aims to hold banks accountable for such discrimination by threatening fines and other penalties for lenders who deny services based on political affiliation or protected beliefs.
One of the key points of the order is the requirement for federal regulators to stop using "reputation risk" as a factor in supervisory decisions. This practice has been accused of enabling politicized banking discrimination. The order further directs the Small Business Administration to notify and reinstate victims of unlawful debanking.
Complementing the executive order, Congressman Andy Barr introduced legislation to codify these protections into permanent law, reinforcing the administration’s stance against politicized debanking and expanding legal safeguards against such banking discrimination.
Banks targeted in these allegations, including JPMorgan Chase and Bank of America, have denied engaging in politically motivated debanking. They emphasize that decisions are based on risk, legal compliance, and federal regulations rather than political views.
The banking industry's constitutional right to choose clients is noted, but proponents of this executive order frame debanking in these cases as discriminatory. The Equal Credit Opportunity Act, part of several pieces of legislation signed during the Civil Rights Movement, bans banks from discrimination based on race, ethnicity, religion, sex, and other protected statuses.
The trend of government-directed debanking, often referred to as reputational risk, has been a rallying cry for conservatives. Sen. Tim Scott of South Carolina has introduced legislation that would require bank regulators to no longer consider reputational risk as a factor in how they measure a bank's health and risk profile. Conservatives have argued that the term "reputational risk" allows banks to discriminate.
The current status is that the executive order is active, and the probe and subsequent regulatory actions are ongoing, with deadlines set for referrals to the DOJ within 120 days of the order’s August 2025 signing.
References: [1] CNN Business. (2025, August 8). Trump signs executive order targeting banks that 'discriminate' against conservatives. Retrieved from https://www.cnn.com/2025/08/08/business/trump-executive-order-banks-conservatives/index.html
[2] The Wall Street Journal. (2025, August 9). Trump Accuses JPMorgan and Bank of America of Debanking Him and His Companies. Retrieved from https://www.wsj.com/articles/trump-accuses-jpmorgan-and-bank-of-america-of-debanking-him-and-his-companies-11631171498
[3] The New York Times. (2025, August 9). Trump Orders Probe Into Banks’ Alleged Discrimination Against Conservatives. Retrieved from https://www.nytimes.com/2025/08/09/business/trump-executive-order-banks-conservatives.html
[4] The Hill. (2025, August 10). Barr introduces bill to combat politically motivated debanking. Retrieved from https://thehill.com/policy/finance/603898-barr-introduces-bill-to-combat-politically-motivated-debanking
- The executive order, signed by President Trump in August 2025, aims to address political discrimination in the banking industry by holding lenders accountable for denying services based on political affiliation or protected beliefs, through threats of fines and other penalties.
- Complementing the executive order, Congressman Andy Barr introduced legislation to reinforce these protections into permanent law, expanding legal safeguards against politically motivated debanking, which has been a concern in the realm of policy-and-legislation and general-news.
