Big United States lenders brace for intensified public scrutiny as a top financial watchdog concludes its review into potentially improper customer account closures. The Office of the Comptroller of the Currency (OCC) is poised to publish findings in coming weeks, expected to name specific banks and potentially lead to disciplinary action. The probe focuses on whether major financial institutions like JPMorgan and Bank of America denied services on religious or political grounds, often termed ‘debanking.’ These financial institutions provide diverse banking services, from lending to account management, for individuals and businesses. The regulator also examined allegations of denied services to conservative-aligned sectors, such as fossil-fuel companies, gun manufacturers, and cryptocurrency firms.
The crackdown on alleged politically motivated debanking gained momentum following a directive from former Republican President Donald Trump last year. Republicans have consistently pressed Wall Street banks over what they label ‘woke’ policies, though lenders deny these claims, asserting they consistently followed risk management rules. A preliminary OCC report in December flagged that nine major banks (2020-2023) had policies restricting services to certain industries or groups, often due to reputational risk. The agency reviewed these policies and approximately 100,000 related complaints.
Since the preliminary report, the OCC has conducted multiple rounds of detailed inquiries into banks’ decision-making processes for providing and revoking services. The watchdog is anticipated to highlight individual banks and cases, potentially escalating some to formal sanctions. Sanctions could range from private supervisory notices demanding policy adjustments to public enforcement actions with penalties. Separately, the U.S. Attorney’s Office in Washington is also probing lenders over debanking allegations. While legal grounds for enforcement remain complex, experts suggest the OCC might argue lenders flouted ‘safety and soundness’ standards. Some lenders, including JPMorgan and Citigroup, have already begun revising their policies on banking certain sectors.
