Key facts
- The OCC is finalizing a review into whether U.S. banks have engaged in "debanking" by closing accounts for political or religious reasons.
- The review is expected to name specific banks and may lead to disciplinary actions and penalties.
- The OCC is examining whether banks denied services to conservative-aligned sectors like fossil fuels, firearms, and cryptocurrency.
- The U.S. Attorney's Office in Washington is also investigating lenders over similar debanking allegations.
- Banks maintain that account closures are based on risk management and operational reasons, not political affiliation.
- Some banks, including JPMorgan and Citigroup, have recently revised policies related to certain sectors, citing a directive from President Donald Trump.
Major U.S. financial institutions are anticipating the release of findings from a significant review by the Office of the Comptroller of the Currency (OCC) concerning allegations of "debanking," where accounts are allegedly closed based on political or religious grounds. This probe, expected in the coming weeks, could result in public naming and shaming of banks and potential disciplinary actions.
The OCC's supervisory review is examining whether lenders, including giants like JPMorgan Chase and Bank of America, have improperly terminated or denied services to customers due to their political or religious affiliations. The investigation also extends to whether banks have restricted services to legitimate sectors aligned with conservative viewpoints, such as fossil fuel companies, firearms manufacturers, and the cryptocurrency industry.
This scrutiny follows a directive from Republican President Donald Trump, who has characterized politically motivated debanking, often perceived as pushed by Democrats, as a problem. Banks, however, deny these claims, asserting that their decisions are guided by risk management protocols rather than political considerations. Republicans have been vocal in pressuring Wall Street to abandon what they describe as "woke" policies, with Trump himself alleging personal account closures for political reasons.
The growing pressure has prompted some banks to re-evaluate their lending and account service policies. Adding to the regulatory pressure, the U.S. Attorney's Office in Washington is also investigating lenders over similar debanking complaints, a probe initially reported by The Wall Street Journal.
In December, the OCC released a preliminary report indicating that nine major banks had policies in place between 2020 and 2023 to restrict services to certain industries or impose stringent risk-management requirements, often to mitigate reputational risks. The agency has since conducted extensive inquiries, with some banks still responding to detailed questions. The final review is anticipated to identify specific banks and cases, with the possibility of formal sanctions, including private supervisory notices or public enforcement actions potentially involving penalties.
Banks generally state that account closures are based on factors like unusual activity, documentation issues, or accounts not being used for their intended purpose, explicitly denying political leanings as a reason. Comptroller Jonathan Gould has confirmed the OCC's investigation into debanking and the exploration of potential legal liability.
President Trump has personally accused JPMorgan Chase and Bank of America of discriminating against conservatives and is pursuing legal action against JPMorgan and Capital One over account closures, claims the banks deny. High-profile cases, such as that of Indigenous Advance Ministries, a Christian charity that accused Bank of America of closing its accounts on religious grounds, and Sam Brownback's claim of a JPMorgan account closure due to religious reasons, have drawn attention. The cryptocurrency industry has also voiced complaints about being shunned by financial institutions.
In response to the evolving landscape, some lenders have adjusted their policies. JPMorgan, for instance, has reportedly removed restrictions on banking sectors including civilian rifles, citing Trump's executive order. Citigroup has also rescinded a policy that limited services to firearm retailers.
However, the legal basis for potential enforcement actions remains unclear, as many of the groups flagged by the OCC may not be covered by existing fair lending laws. The U.S. Attorney's Office is reportedly investigating potential violations of the Financial Institutions Reform, Recovery and Enforcement Act of 1989. Legal experts suggest the OCC might argue that banks violated safety and soundness standards by penalizing lawful activity or overemphasizing reputational risk.