Banks hunt for 'debanked' Republicans in Trump crackdown

• Key Insight: Financial institutions face a tight Dec. 5 compliance deadline to identify and remediate people and companies that had accounts shut. 
• What's at Stake: Bankers are adamant that they do not deny banking services to anyone, and are outraged at being targeted by President Trump. 
• Forward Look: It is unclear whether the Trump administration will levy penalties against banks for debanking customers under Biden-era guidance.  

Banks are scrambling to comply with President's Trump's executive order on "debanking," searching their records for people and companies who were denied banking services on religious or political grounds. 

Banks are six weeks into the process of conducting a four-year look-back review on orders from the Small Business Administration and the Office of the Comptroller of the Currency, the regulators leading the charge. 

Banks are conducting reviews of closed bank accounts, loan denials and consumer complaints including industries disfavored under the Obama and Biden administrations. 

"There will be a massive cost and disruption to the banking system to try to identify this population, and ensure that it's non-existent, and ensure policies are written in such a way to cover the situation," said Jim McCarthy, chairman at McCarthy Hatch, a Dallas consulting firm that uses machine learning algorithms to monitor and analyze consumer complaints and regulatory changes. 

The deadlines are fast approaching.

Financial institutions must comply with the president's debanking order by Dec. 5, which includes notifying and reinstating any person or business denied banking services.

"Three months isn't a lot of time to do a four-year look back," said Jim Richards, a veteran financial crimes expert, who is founder and principal of Regtech Consulting. "It's not easy for most banks to tie account closures and relationship exits with either suspicious activity or fraud."

The Trump administration is focused on instances of debanking cryptocurrency firms, churches, gunmakers, payday lenders, and oil and gas companies, among others. 

"Constituencies like the digital asset industry are going to be watching this closely and will be focused on making sure the deadlines are met," said Steve Gannon, a partner at Davis Wright Tremaine. 

Neither banks nor regulators track or report data on closed accounts or reasons for their closure. The lack of uniform reporting requirements by financial regulators is a key reason why concrete data on debanking remains elusive.

The SBA's directive to 5,000 lenders in late August requires institutions that engaged in "politicized or unlawful debanking" to make reasonable efforts to identify and reinstate anyone who was denied service. The SBA has its own deadline of Oct. 6 to notify participating financial institutions of the new requirements. 

Financial institutions also have to report their findings to the SBA by Jan. 5 and show compliance to avoid penalties ascribed to the president's order "guaranteeing fair banking for all Americans." Regulators also have to conduct reviews and take appropriate remedial action. 

Though bank trade groups have largely agreed with the president's debanking order, individual bankers are adamant that they have not cut off banking services to anyone for political reasons. 

In the scramble to conduct the reviews, experts are questioning how regulators will respond. 

"Are regulators going to force banks to actually make loans that were denied?" asked McCarthy. "Are they going to make them go back through the underwriting process?

McCarthy Hatch identified a notable spike in consumer complaints about bank-account closures between March 2022 and October 2024, which coincided with increased regulatory scrutiny and enforcement actions around anti-money-laundering and risk profiling. 

Comptroller of the Currency Jonathan V. Gould said Sept. 8 that the OCC was taking steps "to end the weaponization of the financial system," and try to root out discrimination "on the basis of political or religious beliefs." The OCC also is reviewing its approaches to Bank Secrecy Act and anti-money-laundering supervision to ensure they are not contributing to unlawful debanking.

The Equal Credit Opportunity Act prohibits banks from denying a potential customer service based on the applicant's race, color, religion, national origin, sex, marital status or age — but not political affiliation. Enforcement actions, if they are taken, would likely stem from allegations that banks engaged in "unfair, deceptive, or abusive acts or practices," known as UDAAP, under the Federal Trade Commission Act, and section 1031 of the Dodd-Frank Act.  

Gould said the OCC will consider a bank's past record, as well as current policies and procedures, when considering remedial action. The agency has already said that past instances of debanking will now be part of assessing a bank's Community Reinvestment Act review. The OCC initially requested information from nine large banks and is reviewing complaint data and third-party sources "to further refine OCC examination efforts."

Trump administration

Banks in a bind as regulators operationalize debanking order

September 12, 2025 8:00 AM

Banks are using various methodologies to identify the population of debanked customers. The process first involves analyzing consumer sentiment, complaints, surveys and recordings to flag people who claim they were debanked. That data can then be used to identify any situations that could fall under the purview of debanking and then drill down into the products and services.

Next, banks are looking at loan denials, account closures, account restrictions, and SBA and Paycheck Protection Program loans to try to match consumer sentiment and complaints to operational data on closed accounts. 

Finally, the data will be analyzed to determine the scope of debanking and a deep analysis will be conducted to identify trends and statistics. 

"If they have that data about individualized decisions, then that should be persuasive that it is not an actionable decision," said Gannon. "The question is going to be, when the data about that decision-making doesn't exist, then what do you do?"

Reputational risk

The moves by the Trump administration are informed by President Trump's own experience with banks, which he has claimed refused to provide him with banking services after his first term due to reputational risk from multiple investigations and lawsuits. 

Banks have long been subject to examination for who they keep as clients, leading many banks to routinely deny service to companies perceived as risky, or even unpleasant, to reduce "reputational risk." In March, the OCC said it would stop assessing reputational risk in bank exams to curb what the Trump administration has said are unjustified and politically motivated banking service denials.

One result of the clampdown is that banks won't file suspicious activity reports or may refuse services to some companies for fear of regulatory retribution under a future administration.  

Banks filed SARS and "exited thousands of relationships as a result of the January 6 insurrection," said Richards, who attributed any account closures to bank policies of not providing financial services to known felons. 

"Now that January 6 has been re-framed by the President as a rambunctious tourist event with heroic victims, all having been pardoned by the President, all of those SARs and exits could be caught up in the regulatory agencies' hunt for past de-banking sins and result in regulatory action," Richards wrote on a recent blog post. "It's nuts."

Further, during the first Trump administration, in January 2021, the Treasury Department and Justice Department were concerned about terrorist attacks during the Biden inauguration. The regulators asked 15 large banks to be on the lookout for suspicious activity in the Washington, D.C., area, including people who may have purchased a firearm or travel plans, according to House Judiciary Committee Chair Jim Jordan.

Documents obtained by Judiciary committee indicate that after the Jan. 6, 2021, insurrection, Treasury and the Financial Crimes Enforcement Network, or Fincen, distributed materials to financial institutions that outlined "various persons of interest" and provided the banks with suggested search terms to identify possible terrorists.

Given that the instructions came during the first Trump administration, some experts suggest there will need to be discussion of the responsibility the government and regulators should take for debanking certain people and industries. 

"At the end of the day, there's going to have to be an allocation of responsibility between the regulators and those institutions that were regulated in connection with who's responsible for the adverse impact on customers, and how that will be allocated — if it's allocated at all," said Gannon.

Republicans have long compared the Biden-era skepticism of cryptocurrency to  Operation Choke Point, a 2013 initiative by the Justice Department and Federal Deposit Insurance Corp., to restrict access to financial services for certain companies like payday lenders and pawn shops. 

Banking experts say the volatility of crypto firms and the collapse of FTX that caused a run on Silvergate Capital Corp., were among the reasons why some crypto firms may have had accounts closed. 

Some banks are likely to have a hard time proving that they were instructed by the government to cut off banking services because supervisory orders cannot be disclosed, putting banks in a Catch-22.

"A number of banks will likely respond by saying that regulators told them not to engage in banking with crypto businesses, as one example," said Gannon. "And banks are looking for the documents to establish that they had been told that, [but] those documents are all confidential supervisory information, so it is a question as to whether it is a fair process.

"If I were a bank and was told by a regulator that I'd be very smart not to bank crypto, what if I don't have a letter or other sources of information and they were doing so at the behest of their regulator?" Gannon concluded.