The White House plans to stop banks from closing accounts based on political or religious views.
Crypto firms and nonprofits may gain better access to banking services under the new federal order.
Banks that engage in debanking could face investigations, fines, or legal action from federal regulators.
The White House is preparing an executive order to stop banks from cutting off clients due to political or ideological views. A draft reviewed by the Wall Street Journal directs regulators to investigate such actions. It cites potential violations of consumer protection laws, antitrust rules and the Equal Credit Opportunity Act.
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The measure could lead to penalties, consent decrees or formal sanctions. Though unnamed, banks like Bank of America appear in past cases that influenced the draft. One example involves a Christian charity that lost access to banking services in 2023. The charity operated in Uganda. The bank said its global policy did not support small businesses abroad.
Political Influence and Jan. 6 Investigations
The draft order also highlights the role of financial institutions in federal probes. Some banks reportedly shared data with law enforcement following the Jan. 6 Capitol riots. The order presses regulators to identify and eliminate any internal rules that caused reputational de-risking. This includes policies that exclude customers over political or ideological concerns.
Officials believe these practices affect public trust. The draft encourages a full review of compliance decisions based on client reputations. It calls for increased accountability in bank-client relationships.
Crypto Sector Faces Financial Roadblocks
Crypto firms have also reported restricted access to banks. Many say institutions quietly ended relationships due to regulatory pressure. The shift followed the collapse of crypto-friendly banks like Silvergate and Signature. Blockchain startups say their services were dropped without clear reasons.
Banks defend their decisions by citing anti-money-laundering requirements. They also highlight strict know-your-customer rules. Compliance teams treat crypto clients as high-risk, making account approvals slower and more selective.
Small Business Access Under Review
The draft order expands the scope to small businesses. It instructs the Small Business Administration to assess how banks handle loan guarantees. This review could impact nonprofit organizations and blockchain startups that depend on loans to operate.
The proposal builds on earlier regulatory changes under the Trump administration. Regulators announced they would stop rating banks on client reputational risk. That move allowed banks to serve more politically sensitive industries without fear of scrutiny.
Justice Department to Step In
The draft empowers regulators to refer certain violations to the Department of Justice. In April, the Justice Department launched a special task force in Virginia. This unit investigates claims of service denial based on political or ideological reasons.
The White House may sign the order soon, though timelines remain uncertain. The policy reflects growing concerns over financial access and free expression.