DOJ subpoenas banks in widening Trump campaign against debanking

• Key Insight: Several banks have received subpoenas from the Justice Department over the past year seeking information about clients who were debanked and the rationale for those actions.
• Expert Quote: "Trump certainly has an animus towards the large Wall Street banks. I don't think debanking is a particular concern to the president, but I do think he is happy to use every cudgel available to bend markets to his favor." —Corey Frayer, director of investor protection for the Consumer Federation of America
• What's at Stake: The subpoenas continue the Trump administration's attempts to control industries and institutions the president personally disagrees with through legal pressure.

A series of newly reported Justice Department subpoenas issued to several major banks seeking information about "debanking" mark an escalation in the Trump administration's monthslong campaign against a practice it claims banks use to unlawfully targets clients for their political beliefs.
The subpoenas, first reported by The Wall Street Journal, requested lists of clients who were allegedly debanked and information about why their accounts were closed. A source familiar with the situation said that several major banks — not just JPMorganChase, Bank of America and Wells Fargo — received subpoenas at different points over the course of the past year.

The Journal reported that the U.S. Attorney's Office in Washington, D.C., led by Jeanine Pirro, is investigating whether the banks violated statutes including the Financial Institutions Reform, Recovery and Enforcement Act of 1989, or FIRREA, which has historically been used to prosecute bank-related fraud.

Spokespeople for JPMorganChase, Bank of America, Wells Fargo and Citi denied requests for comment. JPMorgan and Bank of America have repeatedly denied allegations that they have offboarded customers due to political beliefs. The Justice Department and D.C. attorney general's office both declined to comment.

Since the president returned to office he has continually focused on banks and the issue of debanking.

Days into his second term, Trump railed against Bank of America and JPMorgan for alleged debanking practices. Congressional committees and regulators also acted to limit the role of reputational risk in supervisory examinations.

Last year, the president claimed that he was dropped as a customer by JPMorgan and that Bank of America refused to serve him. He filed a personal lawsuit against JPMorgan and its CEO, Jamie Dimon, alleging his accounts were wrongfully closed for political reasons in the aftermath of the Jan. 6, 2021, riot. The Trump family separately sued Capital One Financial last year, alleging the bank moved to shut down more than 300 accounts tied to Trump-affiliated businesses in 2021. A judge threw out the lawsuit, though it could be refiled.

In August, Trump signed an executive order instructing banking regulators to examine whether financial institutions had engaged in politically motivated or unlawful account closures. The order granted regulators the authority to impose financial penalties and, where necessary, instructed them to refer matters to the attorney general.

One such regulatory body, the Office of the Comptroller of the Currency, published a preliminary report in December that claimed nine of the nation's largest banks limited their business ties to controversial industries, including crypto, predatory lenders and political action committees. The bureau was expected to publish its final report by March or April of this year, but it remains unreleased, according to the source familiar with the situation. The agency may be struggling to identify what laws, if any, were violated, the source said.

According to the Journal, the OCC made no referrals to the Justice Department, and the two agencies are now running separate inquiries.

"Receiving a subpoena from the Department of Justice changes behavior. Full stop," said Corey Frayer, who serves as director of investor protection for the Consumer Federation of America. While Pirro and her agency's interpretation of FIRREA is "novel," Frayer said that the cost of litigating that kind of legal action is "probably a risk that even a lot of these large, well-funded, well-lawyered banks aren't going to want to take."

"Trump certainly has an animus towards the large Wall Street banks," Frayer said. "I don't think debanking is a particular concern to the president, but I do think he is happy to use every cudgel available to bend markets to his favor."

Frayer added that "it's hard to imagine" the Trump administration's actions are not "to some degree related to Jamie Dimon saying 'the banks were getting back in the fight'" over federal regulation — adding that the "timing is suspect." He likened the Justice Department subpoenas and lawsuits Trump has brought against banks to the president's actions against large media companies and his use of the Federal Communications Commission as "leverage to force a settlement."

Nicholas Anthony, a policy analyst at the Cato Institute's Center for Monetary and Financial Alternatives, said he does not believe Trump's campaign against debanking is going to "achieve anything." He noted that despite the federal government's claim that "conservatives and Christians" are targets of discrimination, "millions of them have accounts without any issue whatsoever, both on the individual level and on the business level."

Anthony believes that the Trump administration recognizes debanking has "ignited the base," and that the president and his allies' focus on the issue is "more marketing than substance."

"The big corporate fat cats are attacking the little guy, and Trump is positioning himself as a defender of the people," Anthony said. "The big problem with that is it just rests on a false premise, because many of the problems here are created by the government itself, not by the individual banks."