- Key insight: The nine largest national banks scrutinized industries they feared could damage their reputations, according to preliminary findings of an investigation undertaken by the Office of the Comptroller of the Currency.
- Supporting data: Several firms cited franchise risk tied to firearms makers, pornographers, private prisons, aggressive lenders and tobacco industry, the OCC said.
- Forward look: The OCC says more details will be disclosed, and suggested that Department of Justice referrals could be forthcoming.
The Office of the Comptroller of the Currency Wednesday said the nine largest national banks limited their business ties with controversial industries they morally opposed or that could hurt the banks' reputation in recent years, according to a report of the agency's preliminary findings in a probe into debanking launched earlier this year.
The bank's internal policies revealed they exercised heightened caution toward working with gun dealers, crypto companies, adult film companies, energy companies, predatory lenders, cigarette manufacturers and political action committees, according to the OCC.
"Between 2020 and 2023, the banks maintained public and nonpublic policies restricting certain industry sectors' access to banking services … [which] extended beyond core financial risks and instead focused on the impacts to the banks' reputation associated with engaging with certain industry sectors," the OCC said in a press release. "Many industry sectors were restricted based primarily on how it might appear to the public if the bank provided access to financial services to these sectors, rather than for reasons related to the bank's or the would-be customer's ability to comply with applicable law or the ability for the bank to extend financial services in a safe and sound manner."
The banks included in the review were JPMorganChase, Bank of America, Citi, Wells Fargo, U.S. Bank, Capital One, PNC Bank, TD Bank and BMO Financial Group.
The findings come as part of the agency's review of banks' reputational risk management in recent years. Reputational risk has been singled out by the Trump administration as a pretext for so-called "debanking" of conservative or religious groups or people. In some instances, OCC found that banks avoided sectors with "heightened media, activist, or political scrutiny, and/or with historically negative connotations." Most of the nine banks reviewed avoided working with companies that wanted to harvest oil and gas in the Arctic, a practice that the World Wildlife Fund has
The majority of the nine firms also restricted their business with the coal industry, with some firms categorically excluding from their business firms that generated a certain level of coal-related revenue.
Several of the banks restricted their work with gun dealers, in some cases restricting manufacturers that made military-style weapons that have been used in countless mass shootings in recent decades. One unnamed bank argued that "an association with certain [f]irearms [m]anufacturers and [r]etailers could result in significant [f]ranchise risk, particularly when those firearms are associated with civilian gun violence." The bank asked manufacturers to adhere to "best practices" regarding gun sales as a precondition of its extension of services.
Most of the examined banks also restricted their work with the private prison industry, with some explicitly including immigrant detention centers in this category. The banks worried that these institutions were a reputation risk because they profited from, and therefore were incentivized to promote, increased rates of incarceration.
Some banks demonstrated apprehension to working with predatory lenders that used "aggressive collection practices" that overwhelmingly impacted poor Americans. In other cases car dealers that imposed high interest rates on loans were scrutinized by the banks.
Cigarette and tobacco manufacturers were held at arms-length by a number of the relevant banks, citing negative media coverage and health concerns.
Working with adult entertainment companies, politically affiliated groups and digital-asset companies was also discouraged by a number of banks. In the case of crypto firms, banks often cited
As regulators are continuing to respond to President Trump's August
The order compels regulators like OCC to examine financial institutions for any internal policies that encourage the restriction of ties with customers deemed reputationally risky.
In September the agency
While the White House has framed the order 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.
Despite the pushback, the OCC appears poised to continue its debanking crackdown. OCC said that in some cases, the banks encouraged heightened scrutiny toward high-profile controversial customers that received negative media coverage. OCC says its review is ongoing and that more details on "political and religious debanking," along with "referrals to the Attorney General as required by [the executive order]," are coming.
"The OCC is committed to ending efforts — whether instigated by regulators or banks — that would weaponize finance," said Comptroller of the Currency Jonathan Gould. "Although our work continues, the OCC is today providing visibility into the debanking actions against customers and lawful businesses taken by the nation's largest banks to ensure public awareness, and to halt these harmful and unfair practices."
The Bank Policy Institute responded to the findings by saying it's committed to serving as many customers as they can under the law.
"It's in banks' best interest to take deposits, lend to and support as many consumers and businesses as possible to drive economic growth," BPI said. "The industry supports fair access to banking and is already working together with Congress and the administration to ensure banks are able to serve law-abiding customers."
