On Aug. 7, 2025, President Donald Trump issued an executive order aimed at federal banking regulators and financial institutions to address what the order defines as “politicized or unlawful debanking” based on political or religious beliefs. The order follows public statements by the president accusing certain banks of discriminating against him personally.
The order describes instances of “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.” The order states that financial institutions at times engaged in these practices at the prompting of “federal banking regulators.” The order is addressed to the Small Business Administration (SBA), as a guarantor of loans under various programs, and the member agencies of the Financial Stability Oversight Council — which includes the Federal Reserve Board (Fed), the Office of the Comptroller of the Currency (OCC), the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation (FDIC).
The order includes directives aimed at “politicized or unlawful debanking” past and present.
Curtailing Regulatory Supervision Based on “Reputation Risk”
For decades, federal banking regulators considered “reputation risk” (also referred to as “reputational risk”) an important component of bank supervision. More recently, critics have described this supervisory category as subject to misuse, including as a pretext for discrimination against disfavored political or religious views. Since the beginning of the new administration, the Fed, OCC and FDIC have announced intentions to move away from reputation risk in bank supervision. The order builds on this trend by directing “each appropriate Federal banking regulator … [to] remove the use of reputation risk or equivalent concepts that could result in politicized or unlawful debanking … from their [supervisory] guidance documents, manuals, and other materials.”
Using SBA Loan Programs to Require Financial Institutions to Identify and Redress Debanking
The order directs the SBA to issue, within 60 days, notices to covered financial institutions participating in SBA-guaranteed loan programs. These notices must inform the recipient financial institutions that they have 120 days to identify clients that have been denied service, access to financial services or access to payment processing services “through a politicized or unlawful debanking action”; to provide notice to such clients; and to reinstate them or provide them the “renewed option to engage in such services previously denied.”
Identifying Past or Current Debanking Practices for Regulatory Enforcement
The order directs each federal banking regulator, within 120 days, to review the financial institutions under its jurisdiction “that have had any past or current, formal or informal, policies or practices that require, encourage, or otherwise influence such financial institution to engage in politicized or unlawful debanking and to take appropriate remedial action.” The order contemplates that enforcement actions might be brought under “section 5 of the Federal Trade Commission Act (15 U.S.C. § 45), section 1031 of the Consumer Financial Protection Act (12 U.S.C. § 5531), and Equal Credit Opportunity Act (ECOA).”
Addressing Religious Discrimination Under the Equal Credit Opportunity Act
The order also directs federal banking regulators to “review their current supervisory and complaint data to identify any financial institution that has engaged in unlawful debanking on the basis of religion.” The ECOA makes it “unlawful for any creditor to discriminate against any applicant with respect to any aspect of a credit transaction … on the basis of … religion.” 15 U.S.C. § 1691(a). Agencies may enforce this prohibition administratively under § 1691c. The order directs that, if agencies are unable to secure compliance this way, they should refer the matter to the Department of Justice for civil enforcement, as provided in § 1691e(g).
Developing a Comprehensive Administration Strategy to Combat Debanking
The order directs the heads of the Department of Treasury and the National Economic Council to develop a “comprehensive strategy for further measures to combat politicized or unlawful debanking activities of financial regulators and financial institutions across the Federal Government, including consideration of legislative or regulatory options to eliminate such debanking.”
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The order is the latest step in the administration’s effort to address financial institutions’ perceived political bias. In April, the DOJ’s Civil Rights Division announced the Equal Access to Banking Task Force, which includes the U.S. Attorney’s Office for the Eastern District of Virginia and the Office of the Virginia Attorney General. The joint task force is charged with investigating allegations that individuals or entities were refused access to banking services on the basis of “political views, religious beliefs, or lawful activities.” The task force encouraged those who believe they are victims of debanking to submit tips directly to the task force’s email or through the Civil Rights Division’s complaint portal.
The order is in line with other initiatives for “fair access” to banking services. In the final days of the first Trump administration, the OCC issued final rules requiring large banks to ensure fair access to banking services and mandating that risk assessments should be individualized rather than categorical. The Biden administration halted the rule, but in 2023, the Department of Treasury issued guidance on its own “derisking strategy” that similarly called for individualized, rather than categorical, risk management practices. As noted above, the Fed, the OCC and the FDIC took steps earlier this year to remove references to reputation risk from their supervisory guidance.
Debanking also has been a subject of congressional scrutiny. The Senate Banking Committee, led by Chairman Tim Scott (R-S.C.), held a hearing in February titled “Investigating the Real Impacts of Debanking in America.” Following the hearing, the committee reported out favorably the Financial Integrity and Regulation Management Act, which — like the executive order — would prohibit federal banking regulators from considering “reputational risk” in any of their supervisory activities of banks, including any “guidance, rule, examination manual, or similar document.”
Last Congressional session, the House Judiciary Committee and its former Select Subcommittee on the Weaponization of the Federal Government conducted a lengthy investigation into debanking practices. The investigation resulted in a 47-page staff report detailing the committee’s and subcommittee’s findings that the FBI and the Department of Treasury’s Financial Crimes Enforcement Network manipulated financial institutions to serve as “de facto arms of law enforcement” by requiring heavy monitoring and reporting of customers’ financial activities under the Bank Secrecy Act and Section 314 of the Patriot Act.
Several states also passed “fair access” legislation to prohibit discrimination in banking access based on political or religious affiliation. Florida law, for example, prohibits denying or canceling banking services to current or prospective customers based on their political opinions, religious beliefs, “a social credit score based on certain factors” or other factor that is not “a quantitative, impartial, and risk-based standard.” Florida requires that covered financial institutions annually attest to their compliance and — like the federal task force — has a process for customers to submit complaints of debanking for further investigation. Tennessee passed a similar law in 2024, and other states are considering similar legislation.
In light of the climate of government scrutiny around debanking, financial institutions may consider it prudent to review policies or practices that could be perceived as discriminatory based on political ideology, speech or religious beliefs. The executive order affirms the regulatory principle that “[b]anking decisions must instead be made on the basis of individualized, objective, and risk-based analyses.” Financial institutions should anticipate that the order may lead not only to increased scrutiny from prudential regulators but also increased attention from the private plaintiff’s bar.
McGuireWoods has extensive experience representing financial institutions before federal banking regulators, the Department of Justice, Congress and state attorneys general, including with respect to allegations of debanking. The firm’s Government Investigations & White Collar Litigation and Banking Regulation & Enforcement Practice Groups are nationally recognized and offer experienced, trusted counsel to clients facing high-stakes government investigations, enforcement actions and related litigation. For questions about compliance with this executive order or how recent government actions mentioned in this article affect financial institutions, contact the authors.