Debanking Developments: New Regulatory Scrutiny Coming After Trump Executive Order

Debanking—when banks close or decline to open customer accounts for proper or allegedly improper reasons—is being subjected to even more regulatory scrutiny.¹As we explained in prior articles, President Trump issued a sweeping executive order in August 2024 targeting "politicized or unlawful debanking."²The order requires regulators to (1) remove reputation risk from guidance documents and regulatory or examination materials, (2) take remedial action against financial institutions with policies or practices requiring or encouraging any such debanking, and (3) review supervisory and complaint data to target financial institutions that engaged in "unlawful debanking on the basis of religion" for referral to the U.S. Attorney General for civil enforcement. The order marked a major shift in the executive branch policy toward debanking.