Banks Told to Review Closed Accounts for 'Debanking'

Banks across the country are scrambling to comply with sweeping federal demands to identify whether they shut down accounts or denied services based on customers’ political or religious beliefs—a practice critics call “debanking,” The Wall Street Journal reports.

The effort is part of President Trump’s push to crack down on alleged financial discrimination by major lenders. Regulators are working with the Justice Department to determine whether banks violated civil-rights laws, including the Equal Credit Opportunity Act, according to people familiar with the matter.

The Federal Deposit Insurance Corp. is expected to send letters to large banks as soon as this week, requesting records that could span years, one person said. The Office of the Comptroller of the Currency has already contacted the nation’s nine largest banks, vowing to “end the weaponization of the financial system.”

Midsize and small lenders are also under scrutiny

Last month, the Small Business Administration sent notices to more than 5,000 banks and lenders, ordering them to review past account closures and loan rejections for political or religious bias.

Institutions were directed to offer customers the option of reopening accounts and to report back by early next year. The SBA warned that politicized debanking could trigger referrals to the U.S. Attorney General for civil enforcement.

Banks are now poring over old records, consumer complaints, and rejected loan applications to determine what falls under the new mandate. Some lenders say the rules are vague, leaving them unsure about the scope of their reporting obligations. Even financial institutions that don’t participate in SBA programs received the notices, creating confusion.

The review stems from Trump’s August executive order on “fair banking,” which requires agencies to investigate claims of discrimination and issue penalties, including fines.

The president has said major banks discriminated against him and his family after he left the White House in 2021, claims that JPMorgan Chase, Capital One, and Bank of America have denied. Banks say account closures are driven by financial and legal risk — not politics — and sometimes by regulators themselves.

The SBA said its directive flows directly from the executive order and that additional guidance will follow.

Regulators are also reviewing whether their own past rules contributed to account closures.

Even before the crackdown, some large banks had started revising policies in anticipation of scrutiny from the Trump administration.

Many had previously cut ties with politically sensitive industries, such as firearms and fossil fuels, during the Biden era, citing regulatory concerns and environmental, social, and governance (ESG) goals. Those moves are now expected to come under review as part of the federal probes.

The mounting compliance burden is particularly daunting for regional and community banks, which have fewer legal and regulatory resources. With a December deadline approaching, many are bracing for a costly, complicated process — and possible enforcement action if regulators find evidence of debanking.