The fallout from the January 6, 2021, Capitol riot has sparked heated debates about free speech, political censorship, and, more recently, the alarming practice of "debanking." Reports have emerged that major U.S. banks, including JPMorgan Chase and Bank of America, allegedly terminated financial services to former President Donald Trump and others associated with conservative causes, purportedly under pressure from Biden administration regulators. This practice, driven by the vague and subjective concept of "reputational risk," raises profound concerns about the politicisation of the financial system and its implications for individual liberty and economic fairness. As President Trump prepares to sign an executive order to curb politically motivated debanking in 2025, and with legislative efforts led by Senator Tim Scott underway, the issue demands a critical examination of its origins, impacts, and potential solutions.
The January 6 Capitol riot, while a chaotic and controversial event, was not marked by widespread violence involving firearms or homicides, yet it triggered an unprecedented response from both government and private institutions. Beyond the well-documented deplatforming of Trump from social media platforms like Twitter and Facebook, which he claimed was a coordinated effort to silence his call for peace, a less visible but equally troubling assault unfolded in the financial sector. Trump alleges that after his first term, JPMorgan Chase gave him 20 days to withdraw over $1 billion in deposits, and Bank of America subsequently refused his business, forcing him to spread his funds across smaller banks. These actions, he claims, were driven by political bias rather than financial risk.
The timing of these account closures, shortly after January 6, suggests a connection to the political climate. Sources within JPMorgan have indicated that federal regulators, including the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve, pressured banks to sever ties with Trump and others linked to the protests, citing "reputational risk." This term, originally intended to address clear threats like money laundering or fraud, was reportedly expanded during the Biden administration to encompass political activities, particularly those associated with conservative or Right-leaning groups.
The concept of "reputational risk" has become a lightning rod in the debanking debate. Historically, it was used to flag accounts tied to criminal activities or industries prone to legal violations, such as drug trafficking or dealings in high-risk countries. However, under the Biden administration, regulators allegedly broadened its scope to include political or ideological affiliations, effectively giving banks a pretext to deny services to individuals or businesses deemed controversial. A JPMorgan executive reportedly admitted that regulators "put the fear of God" into banks, discouraging them from serving clients like Trump.
This shift traces back to initiatives like Operation Choke Point, launched under the Obama administration, which allowed regulators to pressure banks to close accounts deemed risky based on subjective criteria like "negative public opinion." While the first Trump administration ended this program, the Biden era reportedly saw a resurgence of similar tactics, targeting industries like fossil fuels, firearms, and cryptocurrencies, as well as individuals associated with January 6. The Trump Organisation's lawsuit against Capital One, filed earlier in 2025, further underscores this trend, alleging the bank closed its accounts post-January 6 due to political motivations, a claim Capital One denies.
The lack of transparency in these decisions exacerbates the problem. Banks, wary of regulatory backlash, often cite vague reasons for account closures, leaving affected customers with little recourse. This opacity has fuelled accusations from conservatives, religious groups, and crypto firms that they are being systematically targeted for their beliefs or affiliations. For example, crypto executives have reported difficulties opening accounts due to regulatory scrutiny, a sentiment echoed by the CEO of Anchorage Digital at a February 2025 Senate hearing.
Debanking is not just a personal grievance for Trump; it represents a broader threat to the principles of fair market access and economic freedom. The ability to engage in commerce, whether through banking, lending, or transactions, is foundational to participating in modern society. When financial institutions, under regulatory pressure, deny services based on political or religious views, it risks creating a system where dissenters are excluded from the economy. Senator Tim Scott, chair of the Senate Banking Committee, has called this practice "un-American," arguing it undermines the right to financial access for law-abiding citizens and businesses.
The case of Trump, a high-profile figure with significant financial resources, highlights the issue's severity. If a former president with decades-long banking relationships and billions in assets can be debanked, ordinary individuals or small businesses with fewer resources are even more vulnerable. Anecdotal reports of conservative organisations, religious groups, and industries like oil and gas facing account closures, suggest a pattern, though concrete data is scarce. Critics like Jeremy Siegel of Pleiades Strategy note that Florida's hotline for debanking complaints received zero reports, indicating the issue may be overstated in some cases. However, the absence of comprehensive data does not negate the experiences of those affected, including Trump, who described spreading his funds across smaller banks as a logistical burden.
Moreover, debanking is not exclusive to conservatives. Liberal lawmakers, like Senator Elizabeth Warren, have raised concerns about small businesses and individuals, including those with Muslim or Middle Eastern backgrounds, facing account closures without clear justification. This suggests that while the narrative has been dominated by conservative grievances, the underlying issue of regulatory overreach and subjective risk assessments affects a broader spectrum of society.
On August 7, 2025, President Trump signed an executive order aimed at curbing politically motivated debanking. The order directs federal regulators, including the Treasury Department, OCC, FDIC, and Federal Reserve, to investigate past and current instances of unlawful debanking and impose penalties, such as fines or consent orders, on offending banks. It also mandates the removal of "reputational risk" from regulatory guidance, a step already initiated by the Federal Reserve and OCC, with the FDIC signalling similar intentions. Additionally, the order requires the Small Business Administration to ensure banks participating in its lending programs make efforts to reinstate clients previously denied services due to political bias.
The executive order builds on legislative efforts led by Senator Tim Scott and Representative Andy Barr, who introduced the Financial Integrity and Regulation Management Act to prohibit regulators from using reputational risk in bank supervision. Scott has emphasised the need to protect Americans' access to financial services, citing the Biden administration's alleged exploitation of regulatory power to target conservatives and industries like crypto. The new Comptroller of the Currency, Jonathan V. Gould, has also pledged to depoliticise the banking system, stating that discrimination based on political or religious beliefs is "unacceptable."
While Trump's executive order and Scott's legislation aim to address a real issue, critics argue they may oversimplify the problem or serve political ends. Graham Steele, a former Treasury official, contends that debanking concerns are exaggerated and could be used to advance deregulation for banks or favour conservative-aligned industries like fossil fuels and crypto. Steele also notes that reputational risk, when used appropriately, helps banks avoid exposure to entities with histories of legal violations, such as Credit Suisse's $500 million fine for money laundering in 2009. Removing this metric entirely could weaken oversight and increase financial risks.
Banks, meanwhile, have walked a tightrope. JPMorgan and Bank of America have denied closing accounts for political reasons, with spokespersons emphasising compliance with federal regulations and a desire for clearer regulatory frameworks. CEOs Jamie Dimon and Brian Moynihan have expressed support for addressing regulatory overreach, with Moynihan noting Bank of America's extensive client base across industries like oil, gas, and firearms. However, their cautious responses suggest a reluctance to directly challenge Trump's claims, likely due to the administration's influence over the heavily regulated banking sector.
The debanking controversy underscores a tension between regulatory oversight and individual rights. On one hand, banks must manage risks to prevent financial instability, as seen in cases like Signature Bank's 2023 collapse due to crypto exposure. On the other, subjective criteria like reputational risk can be abused to exclude individuals or industries based on political or ideological grounds, undermining economic freedom. Trump's executive order and Scott's legislation aim to restore fairness by eliminating vague standards and enforcing penalties for discriminatory practices.
The allegations of politically motivated debanking, exemplified by Trump's experience with JPMorgan and Bank of America, highlight a troubling trend where financial institutions, under regulatory pressure, may exclude individuals or groups based on their beliefs or affiliations. This practice, rooted in the subjective use of "reputational risk," threatens the fundamental right to engage in commerce and risks alienating broad swaths of society, from conservatives to crypto firms to minority groups.
https://www.beckerbrief.com/p/its-finally-comes-out-the-biden-regime