WASHINGTON (Reuters) - U.S. banks and their regulators will be in the hot seat on Wednesday as lawmakers examine claims by conservatives and some companies that they deny services to certain industries or political groups.
The Senate Banking Committee will hold a hearing on what is commonly referred to as debanking, hearing testimony from experts in the field and business owners who say they have been unfairly denied access to banking products.
The banking industry has fiercely resisted accusations that it is denying services for ideological reasons. Instead, he argued that burdensome and opaque banking supervisory rules and practices sometimes make it difficult for banks to provide services, or explain why they cannot.
Wednesday's hearings could indicate what policy responses may be in the works, including potential new regulations or legislation setting a national standard for the provision of banking services.
“This hearing is the beginning of the committee’s work to end this practice and will be an opportunity to hear directly from witnesses about their experiences with debanking, which in turn will help shape solutions to address this issue, including holding regulators and financial institutions accountable for abusing their power,” said a spokesman for Senator Tim Scott, the Republican chairman of the committee.
Among the witnesses who will testify are the head of Anchorage Digital, a crypto platform that claims to have been debanked, and Old Glory Bank, a bank founded in 2022 that specifically calls itself a response to debanking complaints against large lenders.
Republican-led states are pushing legislation to discourage discrimination by banks, and a raft of laws designed to ensure fair lending by banks has led to frustration in the industry.
The long-running dispute made headlines in January when President Donald Trump accused the CEOs of Bank of America and JPMorgan Chase (NYSE: JPM ) of failing to provide banking services to some conservatives, echoing complaints about "woke capitalism."
Banks have said they do not deny services for political reasons. The industry is preparing a new push for clearer rules, advocating for a clear national standard for fair access to financial services, clarity on anti-money laundering laws that could force banks to close accounts, and simplified banking supervision to help companies better understand who they can provide services to.
“We believe that only federal legislation can provide clarity and protection. Federal legislation can also preempt conflicting state laws, which would be positive for banks,” Jaret Seiberg, an analyst at TD Cowen, wrote in a note.