Trump signs order to curb politically motivated account closures

Trump issued an executive order on August 7, 2025, aimed at addressing what he described as politically motivated account closures, a practice known as “debanking.” The directive targets financial institutions suspected of cutting off services to individuals or businesses based on their political beliefs, religious affiliations, or industries such as cryptocurrency and fossil fuels. The order specifically prohibits banks from terminating accounts or denying services for reasons unrelated to illegal activities or systemic risk [1].

The executive action mandates that federal banking regulators—including the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve (Fed)—remove language in their guidance and policies related to “reputational risk.” Critics argue this language has been used to justify account closures of clients engaged in lawful but controversial activities [1]. The directive also requires regulators to examine past bank actions for potential violations of consumer protection laws and the Equal Credit Opportunity Act [1].

The Treasury Secretary, Scott Bessent, has been tasked with developing a comprehensive strategy to combat these discriminatory practices. This includes recommending regulatory and legislative reforms, as well as ensuring federal regulators investigate and penalize institutions found to engage in unlawful debanking. The Small Business Administration is also directed to push for the reinstatement of clients previously denied services due to politically motivated closures [1].

Trump cited several examples of alleged debanking, including the denial of ticket-payment processing for a Republican event by a major bank. Federal regulators, he claimed, had previously encouraged banks to flag transactions involving companies like Bass Pro Shop or Cabela’s, or those containing terms like “Trump” or “MAGA,” without evidence of criminal activity [1].

Trump has publicly accused JPMorgan Chase and Bank of America of cutting ties with the Trump Organization and rejecting deposits from his personal accounts, citing political bias. These claims were fueled by a lawsuit filed by the Trump Organization against Capital One, which it accused of cutting off the family business after the January 6, 2021, Capitol attack. Capital One has denied these allegations [1].

The order reflects broader concerns raised by conservative lawmakers and industry groups, who argue that banks have disproportionately severed relationships with right-leaning organizations and crypto companies. In response, several Republican-led states have introduced or passed legislation to prevent politically motivated account closures [1].

Industry groups, including the American Bankers Association and the Bank Policy Institute, issued a joint statement supporting the executive order, emphasizing that banks aim to serve as many customers as possible. They acknowledged, however, that regulatory pressures and supervisory discretion have created challenges for institutions seeking to balance compliance with customer service [1].

Critics, however, have raised concerns that the order could be used to advance a political agenda. Graham Steele, a former Treasury Department official under the Biden administration, suggested that the focus on debanking might serve to support conservative industries while promoting deregulation for the banking sector [1].

The executive order requires federal banking regulators to review bank policies and practices related to account closures within 120 days. A more comprehensive review of supervisory and complaint data is to follow within 180 days. Regulators will be tasked with identifying any instances where a bank illegally closed an account based on a customer’s religion and referring those cases to the Justice Department [1].

While the banking industry has largely denied allegations of politically motivated account closures, some officials have acknowledged that regulatory efforts to prevent illicit financial activity can sometimes result in customer relationships being terminated without clear explanation [1].

Sources:

[1] Politic, “Trump signs executive order targeting debanking,” https://www.politico.com/news/2025/08/07/trump-banks-crackdown-debanking-00497145