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:
