White House plans to investigate and penalize banks that refuse services based on political views

The White House is set to crack down on banks that it says have dropped customers because of their political views, following complaints by former President Donald Trump that firms such as JPMorgan and Bank of America refused to handle his accounts.

A draft executive order under review would direct financial regulators to examine banks for “politicized or unlawful debanking” practices, according to a Reuters report. It could give authorities the power to impose fines or other penalties on any institution found in breach of the policy. Two industry insiders say the order may be unveiled as soon as this week. The White House has declined to comment.

Trump’s public criticism of major lenders has intensified scrutiny on the country’s biggest banks and highlights how his personal grievances can shape policy under his administration. Although his business interests are held in a trust, he remains the ultimate owner, prompting accusations of conflicts of interest. “While other moves reflect his own economic assessment, this seems to reflect his personal beefs,” said Peter Ricchiuti, a senior professor at Tulane University’s Freeman School of Business. He added that if the order is used as retribution against specific banks, it could spark fresh turmoil in financial markets.

On Wednesday, Bank of America’s stock didn’t move while JPMorgan’s stock slipped 0.4%, following declines of 0.6% and 1% respectively on Tuesday.

Trump says banks refused his money

The proposed order comes after Trump told CNBC on Tuesday that both banks had turned him away. Without presenting any evidence, he claimed the Biden administration asked regulators to “destroy” him. “They did discriminate,” he said of actions by JPMorgan once his first term ended. “I had hundreds of millions, I had many, many accounts loaded up with cash … and they told me, ‘I’m sorry sir, we can’t have you. You have 20 days to get out.’”

He went on to say that the banks “totally discriminate against, I think, me maybe even more, but they discriminate against many conservatives.” Trump said he then tried to place money with Bank of America, but was refused again. “I ended up going to small banks all over the place,” he said. “I was putting $10 million here, $10 million there, did $5 million, $10 million, $12 million,” though he did not name those smaller banks.

JPMorgan issued a statement that did not reply directly to Trump’s account. “We don’t close accounts for political reasons, and we agree with President Trump that regulatory change is desperately needed,” the bank said. “We commend the White House for addressing this issue and look forward to working with them to get this right.” Bank of America also declined to address Trump’s specific allegations.

Under President Joe Biden, regulators had been allowed to consider “reputational risk”, the chance that bad publicity could harm the bank or lead to lawsuits, when deciding whether to take on certain clients.

Sources say banks felt pressure to weigh that risk when handling Trump, given his ongoing legal battles. JPMorgan, for example, has long-standing ties to the Trump family and holds several of its campaign accounts.

In June, after Trump returned to office, the Federal Reserve told its supervisors to stop using reputational risk as a factor in bank reviews, an issue that banks had complained about for years.

Wells Fargo analyst Mike Mayo says the upcoming order would make clear that banks cannot use such rules as a shield. “Banks can use their normal underwriting standards and deny services, but not blame regulators or use reputational risk as a justification,” he said.

Bank of America responded that it “welcomed the administration’s efforts to clarify the policies,” adding that it has “provided detailed proposals and will continue to work with the administration and Congress to improve the regulatory framework.”

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