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President Trump has signed a sweeping executive order aimed at curbing what he calls “politicized or unlawful debanking.” 

This is intended to place new pressure on major financial institutions accused of denying services based on political or religious beliefs. The move comes amid mounting criticism from conservatives and some crypto advocates that banks have too much discretion to cut off customers.

New Scrutiny for Financial Institutions

The order instructs federal bank regulators to investigate whether decisions to deny services were politically or religiously motivated. Regulators must review supervisory data for potential violations and refer such cases to the Attorney General. If institutions are found to have engaged in politicized or unlawful debanking, they could face fines, consent decrees, or other remedial measures.

“The banks discriminated against me very badly,” Trump told CNBC’s Squawk Box, claiming that JPMorgan Chase and Bank of America refused him services due to his political stance.

Full executive order details are available here.

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Rolling Back ‘Reputational Risk’ Rules

One of the most significant elements of the order is the removal of “reputational risk” from bank examination criteria. The Federal Reserve and the Office of the Comptroller of the Currency have already taken this step, with the FDIC expected to follow. Critics have long argued that reputational risk rules give banks excessive leeway to sever ties with customers deemed controversial.

The Small Business Administration will also require banks to make efforts to reinstate customers who were denied services unlawfully.

Crypto Industry Complains of Debanking

During the Biden administration, crypto companies were flagged as higher-risk clients, making it harder for them to secure banking relationships. The new order is seen as a win for the digital asset industry, which has complained of being unfairly targeted.

Earlier this year, the Trump Organization sued Capital One, alleging it closed hundreds of accounts after the January 6, 2021, Capitol attack. The bank countered that the lawsuit lacked factual evidence of political bias.

Mixed Reaction from the Finance Sector

Bank lobby groups, including the Bank Policy Institute and Financial Services Forum, welcomed the order, calling it a necessary rollback of “runaway regulations.” In a joint statement, they said:

“It’s in banks’ best interest to take deposits, lend to, and support as many customers as possible. Unfortunately, regulatory overreach, supervisory discretion, and a maze of obscure rules have stood in the way.”

For years, critics from both political parties have warned that debanking, originally intended to combat fraud, terrorism, and money laundering, has been used too broadly — sometimes ensnaring innocent customers. Lawmakers have cited thousands of complaints from consumers who say they were denied services without clear justification.

Read more about political and religious debanking concerns here and Yahoo Finance’s coverage of Trump’s order here.