JPMorgan says it's facing federal probe over 'debanking'

• Key insight: JPMorganChase is cooperating with the federal government as it reviews the bank's policies and procedures related to how it decides who to bank. 
  
• What's at stake: The Trump administration has accused banks of engaging in so-called "debanking" and restricting financial access to Trump supporters.
  
• Forward look: Observers will be watching to see if other banks disclose similar probes.

JPMorganChase is responding to requests for information from government agencies and other external parties that want to know more about how it decides which customers to bank and which ones to deny services.

The $4.6 trillion-asset company disclosed in a regulatory filing Tuesday that it's facing "reviews, investigations and legal proceedings" following President Donald Trump's recent executive order accusing banks of "debanking" certain customers based on their political or religious beliefs and particular business activities.

JPMorgan did not say in its quarterly filing when it expects the reviews and investigations to be completed. A spokesperson for the bank declined Tuesday to comment further on the matter.

JPMorgan is the second large U.S. bank to disclose such a federal probe. Last week, Bank of America said it too is "responding to demands and requests" related to Trump's executive order. Neither bank's filings included details about the potential financial impact of the government's inquiries.

Wells Fargo, the fourth-largest U.S. bank by assets, did not make any specific mention of the Trump executive order in its latest quarterly regulatory filing. Citi, the third-largest bank, has not yet filed its quarterly report. 

Three other top-10 U.S. banks by asset size — U.S. Bancorp, PNC Financial Services Group and Truist Financial — have not specifically mentioned debanking investigations in their most recent quarterly filings.

Banks have moved quickly in response to Trump's executive order, which instructed federal regulators to review banks' policies and procedures, both past and present, to determine whether the banks are or have been engaged in politicized or unlawful debanking. 

The Aug. 7 order accused financial institutions of engaging "in unacceptable practices to restrict law-abiding individuals' and businesses' access to financial services on the basis of political or religious beliefs or lawful business activities." It also said that banks, in response to the Jan. 6, 2021, insurrection at the U.S. Capitol building, participated in "government-directed surveillance programs" that focused on individuals "participating in activities and causes commonly associated with conservatism and the political right." 

The executive order did not identify specific banks. It did say that regulators would have 120 days, or four months, to complete the reviews and identify problem banks, which could be subject to fines, consent orders and "other disciplinary measures." 

Concrete data on instances of "debanking," when a bank closes an individual or business account, remains hard to capture. Neither banks nor regulators track or report data on the numbers of closed accounts or the reasons for their closure. 

Trump himself has specifically focused on Bank of America, accusing CEO Brian Moynihan of debanking conservatives during a question-and-answer session at the World Economic Forum in Davos, Switzerland, in January.

A month later, Moynihan pointed the finger at overregulation, saying the Bank Secrecy Act and know-your-customer requirements created burdens for banks.

"Bank of America has 70 million consumer customers, and millions of small businesses all over the country, all over the world, and so we bank everybody," Moynihan said at the time.