Debanking is back in the spotlight this week after President Trump said Tuesday that the country’s two largest US banks, JPMorgan Chase (JPM) and Bank of America (BAC), denied him as a customer.
“The banks discriminated against me very badly, and I was very good to the banks,” Trump said on CNBC’s “Squawk Box,” adding that “they discriminate against many conservatives.”
For years, Republicans have claimed that US banks have denied accounts to certain customers for political reasons. Crypto companies have warned more recently that they weren’t permitted to get banking services during the Biden era.
“I had hundreds of millions. I had many, many accounts loaded up with cash. I was loaded up with cash, and they told me, ‘I’m sorry, sir, we can’t have you. You have 20 days to get out,'” Trump said of his experience losing bank accounts with JPMorgan Chase.
The president said he then went to Bank of America “to deposit a billion dollars plus” and was similarly denied.
“He said, ‘We can’t do it,'” Trump told “Squawk Box” while also referencing pressure on banks from Washington, D.C., regulators as a key reason for why he and others have been denied banking services.
“I ended up going to small banks all over the place,” Trump added.
The president’s comments came in response to a Wall Street Journal report late Monday stating that the White House is preparing to draft a related executive order around debanking that would fine banks found discriminating against customers on political grounds.
Bank of America did not immediately offer a response to Trump’s comments.
“We don’t close accounts for political reasons, and we agree with President Trump that regulatory change is desperately needed. We commend the White House for addressing this issue and look forward to working with them to get this right,” a JPMorgan spokesperson said in emailed comments.
Both of these giant lenders and their CEOs have denied debanking customers on political grounds.
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Trump first brought visibility to the debanking issue back in January when he confronted Bank of America’s Brian Moynihan about it during a live Q&A at the World Economic Forum in Davos, Switzerland.
“I hope you start opening your bank to conservatives,” Trump told Moynihan. The president also appeared to include JPMorgan Chase CEO Jame Dimon in his confrontation. “I don’t know if the regulators mandated that because of Biden or what, but you and Jamie and everybody else, I hope you open your banks to conservatives, because what you’re doing is wrong,” Trump added.
Two months later, the Trump Organization sued major credit card lender Capital One (COF) for allegedly debanking hundreds of its accounts following the Jan. 6, 2021, attack on the US Capitol in Washington, D.C.
Bank regulators have already eliminated one element in supervision that has been pointed to as a culprit of debunking, known as reputational risk. Critics said this element of supervision was previously too subjective, allowing regulators additional room to penalize lenders for taking on customers they deemed risky.
“The heart of the problem is regulatory overreach and supervisory discretion,” a spokesperson for the Bank Policy Institute, a D.C. banking industry advocacy group, said in an emailed statement.
“The banking agencies have already taken steps to address issues like reputational risk, and we’re hopeful that any forthcoming executive order will reinforce this progress by directing regulators to confront the flawed regulatory framework that gave rise to these concerns in the first place,” BPI added.
Each of the bosses for these big banks has addressed the issue by also pointing a finger at regulators.
“We have not debanked anyone because of political or religious relationships, period,” JPMorgan’s Dimon said during a podcast interview earlier this year, in which he acknowledged that debanking happens.
“The reality is that if they gave us clarity from the regulatory thing and avoid the second-guessing, that would be helpful,” Bank of America’s Moynihan said in a CBS interview on Sunday.
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
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