Trump wants to stop banks from de-banking conservatives and crypto. Here’s what to know

President Donald Trump is close to issuing an executive order that could lead to financial penalties for lenders that unlawfully “de-bank” clients - that is, cutting off customer accounts for political or religious reasons or ties to legal but risky industries, such as the cryptocurrency market.

The claims that regulators force banks to close accounts of executives in the fast-growing but speculative cryptocurrency industry, or over politics, popped up throughout last year’s election cycle, amplified by Trump himself.

While much of how Washington supervises Wall Street is secret, regulators are on the lookout for risky behavior that could threaten the banking system.

Do banks really de-bank their customers? Sometimes - if customers are engaged in questionable or unusual behavior that’s not consistent with “safety and soundness.” That’s always been the case.

But is there a concerted top-down initiative to de-bank purely according to politics? It depends on whom you ask, but much of the evidence of “de-banking” revolves around safety and soundness issues, rather than political concerns.

Here’s what to know about “de-banking.”

What’s the accusation?

Conservatives have said that regulators appointed by President Joe Biden spent past years conscripting banks to target Trump’s political opponents. Tech investor and Trump adviser Marc Andreessen had said about 30 founders of tech start-ups were “de-banked.” He called the project “Operation Chokepoint 2.0.”

Trump himself said he was dropped as a bank customer, including at JPMorgan Chase.

“The banks discriminated against me very badly, and I was very good to the banks,” Trump said, speaking Tuesday on CNBC’s “Squawk Box.”

A JPMorgan spokeswoman said that the bank doesn’t close accounts for political reasons and that it agreed with Trump that regulatory change is needed. “We commend the White House for addressing this issue and look forward to working with them to get this right,” she said.

What will this order change in Washington?

The order isn’t public yet, but a draft reviewed by The Washington Post, dated from July, directs bank regulators to investigate whether any financial institutions have violated the Equal Credit Opportunity Act, antitrust laws or consumer financial protection laws. Any bank found in violation of those statutes could face financial penalties or other disciplinary measures.

The White House did not immediately respond to a request for comment.

Bank regulators have already adopted a much friendlier approach to crypto and other industries than under the Biden administration. They have also committed to ending some of the types of activities the order warns against, such as using so-called reputational risk to assess whether to extend credit or banking services to a new client.

Does Washington tell Wall Street whom to do business with?

Regulators don’t generally tell banks whom they can and cannot provide services to. They do tell them what to look for - potentially illegal activity - and enforce rules requiring that banks know whom they are doing business with and what those customers are doing. Banks determine on their own if it’s profitable to bank with someone or a company engaged in high-risk but lawful activities.

Operation Chokepoint

It’s a reference to an initiative that started during the Obama administration to ferret out fraud, particularly in the payday lending space. It involved officials at the Justice Department and some bank regulators. Republicans criticized the initiative as an inappropriate campaign to curtail banks’ work with lawful businesses.

Operation Chokepoint remains a political talking point among conservatives when criticizing regulatory agencies. They frame it as campaign by Democrats to abuse their power by targeting conservatives, said Dru Stevenson, a law professor at the South Texas College of Law, who has studied the issue. “It is more myth than reality,” he said.

Is ‘Chokepoint 2.0’ real?

Big players at financial and tech start-ups definitely have a perception that bank regulators are out to get them. Top banking regulators’ stated skepticism about the cryptocurrency industry - after major crypto blowups a few years ago - coupled with a Biden-era crackdown on crypto from the Securities and Exchange Commission, have fueled a widespread belief that the prior administration was hostile to crypto.

Crypto can be a vehicle for money laundering by terrorist groups such as Hamas, Russian arms dealers and other bad actors, regulators previously said. And some recent bank blowups appear to have justified bank regulators’ concerns over the fast-growing, high-risk industry. Two of three banks that failed in March 2023 - Silvergate and Signature - specialized in crypto but failed abruptly when they didn’t appropriately manage the risks, said Steven Kelly, formerly the associate director of research at the Yale Program on Financial Stability.

Were Biden bank regulators hostile to tech firms?

That’s tough to argue, too, because tech companies benefited from the way Washington responded to one of the biggest recent bank failures.

When Silicon Valley Bank collapsed, the third bank to fail in March 2023 and the second-largest bank failure in U.S. history, a lot of tech companies were in danger of financial ruin. In a classic bank run, these companies rapidly bolted for the exits when SVB got into financial trouble following a rise in interest rates, which in turn caused the bank’s holdings of long-term bonds to decline in value.

Though more than 90 percent of SVB’s depositors were “uninsured,” or above the typical $250,000 federal deposit insurance cap, they were all made whole after the Biden administration and the Federal Reserve determined the bank’s failure posed a risk to the financial system. Washington’s steps to contain the fallout from SVB’s failure meant even tech and crypto companies with billions deposited at the lender wouldn’t have to take haircuts on any of their money. Notably, regulators did not extend that same safety net to a much smaller group of less-connected depositors at a small Oklahoma bank that failed last fall.

What else are people saying?

In her 2024 memoir, Melania Trump said that she was “shocked and dismayed” to learn that her longtime bank decided to close her account and also that it refused to allow her son Barron to open a new one. “This decision appeared to be rooted in political discrimination, raising serious concerns about civil rights violations,” she wrote.

Trump provides no other details about the experience but characterizes it as part of a “cancel mob” plaguing society at large, according to her book.

THE WASHINGTON POST