- Key insight: A report from the Cato Institute found that most cases of debanking were regulatory rather than ideological in their origins, and that banks should be free to curate their reputations without government pressure
- Supporting data: Only 35 of 8,300 complaints cited in the report referenced politics or religion, the Cato analysis found.
- Forward look: Regulators are continuing to investigate the largest banks for evidence of political or religious bias, but have also taken actions to remove reputational risk from their examination manuals and sought ways to simplify anti-money-laundering compliance so as to reduce instances of debanking.
A new report by the Cato Institute found that most documented instances of debanking can be attributed to supervisory and/or regulatory pressure rather than political or religious bias, a finding that is at odds with the White House's declarations on the issue.
In the report,
In an August
"President Trump believes that no American should be denied access to financial services because of their political or religious beliefs, and that banking decisions must solely be made on the basis of individualized, objective, and risk-based analyses," the White House said upon Trump's signing of the executive order.
Instead, the Cato report found that most instances of debanking stem from government pressure, regulatory incentives and overly sensitive anti-money-laundering rules that make certain customers expensive or risky to serve.
"The majority of cases [involve] government officials intervening in the market by either directly or indirectly telling banks how to run their business," Anthony said in an interview. "Political and religious debanking appear to be almost nonexistent. Private businesses should be free to make their own decisions, even if it means they face negative consequences from customers."
Anthony defines debanking as the "sudden closure of a financial account" and identifies four categories of debanking: governmental, operational, political and religious.
The report finds governmental debanking to be the most common form, defined as instances where the government either directly pressures banks to drop customers or indirectly incentivizes them to cut ties through regulation. One regulatory lever to affect account closures is the Bank Secrecy Act, which requires banks to monitor customers for suspicious activity and file confidential reports or face steep penalties. The result, Anthony argues, is a system that directs banks to err on the side of caution, pushing banks to exit relationships that are legal but complex.
"We see a lot of claims by politicians that this is religious or political discrimination, and that that is why the government needs to come in," Anthony said. "However, when I dug through the cases and actually looked at what's happening on the ground, the evidence just does not support that. Time and time again, it's turning back to the same old thing, and that's the complications caused by existing government interventions."
To test claims of ideological discrimination, Anthony draws on a
Although regulators last year removed reputational risk as a supervisory tool, Anthony argues recent allegations the comptroller of the currency made against banks incorrectly framed account closures as voluntary steps taken by banks to protect their reputations.
While the White House has framed the August executive order on debanking as an effort to protect conservatives from undue denial of service by financial institutions, critics argue the effort is rooted in Trump's personal grievances and financial interests, as there is no legal basis to force banks to serve anyone, except to counter discrimination against protected classes.
In preliminary findings from a probe into debanking launched earlier in 2025, the OCC
Such findings fail to acknowledge such steps were largely pursuant to regulations on the books at that time, says Anthony.
"The OCC almost seemed to frame it as banks were closing their accounts to protect their own reputation," Anthony said. "Yet it really didn't go into detail that banks are graded on their reputation — at least during that time. And again, I want to be clear because the OCC has stepped back from reputational risk regulation, but we can't ignore that that was going on at the time."
Anthony said that "operational debanking," where banks choose to sever ties for business or reputational reasons absent government pressure, is, in his view, a legitimate choice for banks to make and a feature of a market system. Banks may respond to consumer boycotts, shareholder activism, or brand considerations, he said, but ultimately their decision about whether to take on an individual customer or company as a client does not impact that customer or client because they have many other banks to choose to do business with — banks that may have different fiscal or moral considerations.
"There is an extent to which banks are going to do things to curate their reputation," he said. "In the way that maybe a Christian community bank might say no to adult entertainers, but a new neobank might say, 'Yes, absolutely.'"
Anthony argues banks' decisions about curating their reputation do not amount to systemic exclusion, because customers were often able to move their accounts to other institutions.
"It wasn't like
That process, Anthony acknowledges, is costly and disruptive. "That's very frustrating. You have to go through change, all the bills, payroll, all of that. It's not a snap of the fingers," he said. "But that is the market working, that we have this suite of options so that when one says no, another says yes."
Rather than forcing banks to serve specific customers or treating them as public utilities, he calls on Congress to focus on the source of the distortion: government-induced debanking. He wants lawmakers to permanently bar reputational risk supervision, reform or repeal key parts of the BSA and prevent future administrations from reviving informal pressure campaigns through executive action.
"I really want to see Congress step in so that we don't see a future administration say, 'Oh, actually, we're going to bring this back,'" Anthony said, warning that executive orders can be reversed "with the strike of a pen."
Anthony would like to see more thorough investigation of the scope of the issue before government action going forward.
"It's good to hear concerns. It's good to respond to constituents that you hear them and you're investigating the issue," he said. "But there needs to be a space between hearing the concern and acting, and that space needs to be an actual investigation." Sometimes, he added, "acting fast is not the right solution. Sometimes we need to take a beat and figure out what's going on."
