On August 7, 2025, President Trump issued an Executive Order, Guaranteeing Fair Banking for All Americans. The Order directs the “Federal member agencies of the Financial Stability Oversight Council with supervisory and regulatory authority over banks, savings associations, or credit unions” (likely encompassing the Federal Reserve, the OCC, the FDIC, the CFPB, and the NCUA) and the SBA (collectively, the “Agencies”) to take actions to combat “politicized or unlawful debanking.”
The Order builds on other recent federal and state anti-debanking efforts and affects a broader range of financial institutions than the federal fair access regulation that the OCC promulgated during the final weeks of the first Trump Administration and that the incoming Biden administration put on hold shortly thereafter. We outline several key takeaways from the Order below.
1. The Order sets forth a novel definition of “politicized or unlawful debanking” that should exclude risk-based decisions.
The Order outlines various federal initiatives to address “politicized or unlawful debanking,” which the Order defines as:
an act by a bank, savings association, credit union, or other financial services provider
to directly or indirectly adversely restrict access to, or adversely modify the conditions of,
accounts, loans, or other banking products or financial services of any customer or potential
customer on the basis of the customer’s or potential customer’s political or religious beliefs,
or on the basis of the customer’s or potential customer’s lawful business activities that the
financial service provider disagrees with or disfavors for political reasons.
The Order does not purport to prohibit banks from restricting access to products and services on some other basis – such as bona fide credit risk or anti-money laundering (AML) risk. The definition also does not require decisions to be individualized to each customer, unlike certain state fair access rules (such as Florida’s, which requires that financial institutions make decisions based on factors “unique” to each customer).
Despite the Order’s use of the term “unlawful,” no act of Congress specifically outlaws all of the conduct that could fall within the definition of politicized or unlawful debanking. Instead, the Order directs the Agencies to penalize politicized or unlawful debanking that violates applicable law.
The Order lists the following examples of potentially applicable laws:
- Section 5 of the Federal Trade Commission Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” Although the FTC cannot enforce this prohibition against banks, the banking agencies have enforced it against banks in the past, under Section 8(b) the Federal Deposit Insurance Act, authorizing an appropriate federal banking agency to issue cease-and-desist order for a violation of law.
- Section 1031 of the Consumer Financial Protection Act, which prohibits engaging in unfair, deceptive, or abusive acts or practices (UDAAP) in connection with the offering or provision of consumer financial products or services.
- The Equal Credit Opportunity Act (ECOA), which prohibits creditors from discriminating against any applicant on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.
None of these statutes specifically prohibits a financial institution from closing or refusing to open an account on political or reputational grounds. Additionally, ECOA, which does prohibit discrimination on the basis of religion, does not apply to deposit accounts. Therefore, the Agencies may need to rely on creative interpretations of the law to take action against financial institutions. This approach raises the prospect that a court could cite the “major questions doctrine” to strike down novel applications of these statutes in the debanking context, as occurred during the Biden Administration, when the CFPB sought to extend its authority to prohibit “unfair” practices to discrimination in the offering of consumer financial services such as deposit accounts.
2.The Order directs the Agencies to identify financial institutions with policies or practices that promote debanking and take remedial action.
The Order directs the Agencies to conduct two sets of reviews. First, within 120 days, each Agency must identify financial institutions with “any past or current, formal or informal, policies or practices that require, encourage, or otherwise influence such financial institution to engage in politicized or unlawful debanking.” The Agency must then take appropriate remedial action, to the extent authorized and consistent with applicable law, including levying fines, issuing consent decrees, or imposing other disciplinary measures against any financial institution that the Agency finds has engaged in politicized or unlawful debanking that violates applicable law.
Second, within 180 days, each Agency must review current supervisory and complaint data to identify any financial institution that has engaged in unlawful debanking on the basis of religion. If such a financial institution is unable to come into compliance with ECOA, the Order instructs the Agency to refer the matter to the Attorney General for an appropriate civil action, as appropriate.
Also within 180 days, each appropriate federal banking regulator must remove the use of reputation risk and “equivalent concepts” from all of its exam guidance, manuals, and other documents, and provide formal guidance to examiners to that effect.
3. The Order covers a broad range of banks, savings associations, credit unions, and other nonbanks, with no minimum size threshold, and contains no time limit on look-back reviews.
The Order requires the Agencies to take actions with regard to financial institutions subject to the Agencies’ jurisdiction. Unlike the OCC’s 2021 fair access regulation, the Order includes no minimum asset threshold, so small and large financial institutions alike are in scope for review by the Agencies.
At a minimum, financial institutions in scope of the Order should include those national and state-chartered banks supervised by each of the respective prudential bank regulators, as well as credit unions under the jurisdiction of NCUA. The Order also likely covers SBA-supervised lenders such as nonbanks that are authorized to make 7(a) loans, as well as nonbanks that are subject to CFPB jurisdiction.
Key features of the Order will present implementation challenges for the Agencies and the institutions required to comply with its directives. For example, the Order does not impose a time limit on its look-back reviews.
4. The SBA must require financial institutions with which it guarantees loans to reinstate politically or unlawfully debanked customers and identify and notify potential clients who were denied service through politicized or unlawful debanking action.
The Order requires the SBA to compel financial institutions with which it guarantees loans under its lending programs and that are subject to the SBA’s “jurisdiction and supervision” to remediate prior instances of debanking. Covered institutions for these purposes likely include SBA-supervised lenders such as nonbanks that are authorized to make 7(a) loans. It is less clear whether the Order intends the SBA to take action with respect to banks that make 7(a) loans, over which the SBA has limited supervisory authority.
Within 120 days, the SBA must require financial institutions to take the following actions for those who were denied services through a politicized or unlawful debanking action in violation of a statutory or regulatory requirement under section 7(a) of the Small Business Act or any requirement in a Standard Operating Procedures Manual or Policy Notice related to a program or function of the Office of Capital Access:
- Previous Clients: Financial institutions must make “reasonable efforts to identify and reinstate any previous clients of the institution or any subsidiaries denied service” on such a basis and send notice of the reinstatement to the victims.
- Potential Financial Services Clients: Financial institutions must identify “all potential clients” who were denied access to “financial services” on such a basis and provide notice to each victim advising of the denied access and the renewed option to engage in such services previously denied.
- Potential Payment Services Clients: Financial institutions must identify “all potential clients” who were denied access to “payment processing services” on such a basis and provide notice to each victim advising of the denied access and the renewed option to engage in such services previously denied. The Order does not define the term “payment processing services” or explain why the SBA would have jurisdiction over such services.
SBA regulations and guidance do not specifically require participating lenders to provide fair access to financial services, outside of implementing federal laws and regulations prohibiting discrimination on the basis of race, sex, and religion, but do contain general ethical standards that the SBA may claim are relevant, and also set forth a requirement to “[b]e open to the public for the making of [SBA] loans (not be a financing subsidiary, engaged primarily in financing the operations of an affiliate).”
5. The Order builds on other recent federal efforts to combat debanking.
Debanking has been a significant focus during the early months of the second Trump Administration. For example:
- In April 2025, the U.S. Attorney for the Eastern District of Virginia and the Department of Justice launched a debanking task force.
- Federal banking agencies have implemented changes to back away from the evaluation of “reputational risk,” which the Chairman of the Senate Committee on Banking, Housing, and Urban Affairs described as tool abused by federal regulators to carry out a political agenda. The Federal Reserve announced in June 2025 that it would no longer consider reputational risk in examinations, and the OCC announced in March 2025 that it had begun removing references to reputation risk from its booklets and guidance documents. The Acting FDIC Chairman Hill stated in a letter in March 2025 to Chairman of the Subcommittee on Oversight and Investigations Meuser that Chairman Hill agreed that banking regulators should not use “reputational risk” as a basis for supervisory criticisms and that the FDIC had begun working on a related rulemaking.
- In his confirmation hearing, Comptroller Jonathan Gould vowed to “shine a spotlight” on de-banking, raising the possibility that the OCC will revive a rule similar to the 2021 fair access regulation.
- Debanking has also attracted bipartisan interest on Capitol Hill. For example, Republicans have circulated drafts of legislation requiring fair access to banking, and Senate Banking Committee Ranking Member Elizabeth Warren issued a report in February identifying alleged instances of debanking.
The Order ushers in a new phase of federal anti-debanking policy, focusing on prior conduct and making the investigation and remediation of debanking offenses an immediate priority of several federal financial institution regulators.
If you have any questions concerning the material discussed in this client alert, please contact the members of our Financial Services practice.
Back
