Trump is reportedly preparing an executive order to punish banks that discriminate against customers based on their political views or involvement with cryptocurrency. This move comes amid accusations that banks have unfairly targeted specific groups.
Banks and Crypto: A History of Tension
For a while now, crypto companies have complained about being shut out by major banks. They claim this “de-banking” is happening without good reason, citing incidents like a reported warning from JPMorgan Chase to Coinbase about closing crypto-related accounts, and Elon Musk’s claims that numerous tech entrepreneurs lost bank access. Banks, however, defend their actions, saying they’re following anti-money laundering rules and managing reputational risk to avoid fraud and legal issues.
Targeting “Reputational Risk”
Trump’s executive order will reportedly instruct federal bank regulators to investigate potential violations of several laws: the Equal Credit Opportunity Act (which prohibits discrimination in lending), antitrust laws (which promote fair competition), and consumer protection laws. The goal is to prevent banks from using compliance as a cover for political bias and to address concerns about the overuse of “reputational risk” as a justification for de-banking.
Enforcement and Penalties
The order could be implemented very soon and will give regulators the power to levy fines and other penalties on banks found to be in violation. The Small Business Administration will also review banks that provide SBA loans, adding another layer of scrutiny for lenders accused of unfairly cutting ties with clients.
The Political Landscape
Trump has openly criticized major banks for allegedly turning away conservative clients, a claim the banks have denied. However, Republican politicians have joined the chorus of complaints about “woke capitalism,” arguing that banks are unfairly targeting businesses associated with the right, such as gun manufacturers and fossil fuel companies. This political pressure heavily influenced the creation of the executive order.