No, You Don't Actually Have a Right to a Bank Account

New York Times

15-05-2025

When Brian P. Brooks was a financial regulator during the first Trump administration, he would hear complaints about 'debanking' and force himself not to roll his eyes.
The expression was being used by representatives of some rather polarizing businesses, such as private prisons and fracking operators, who complained to Mr. Brooks, the acting comptroller of the currency, that their bank accounts were being closed without warning. His reaction boiled down to the free-market equivalent of tough luck. He didn't see it as his job to compel banks to do business with anyone in particular.
Five years later, Mr. Brooks, who now runs a brokerage firm and advises cryptocurrency companies, says he is convinced there is a problem. He is among a growing number of people in the finance world who have urged Trump administration officials over the past half-year — in meetings in Washington and at the Mar-a-Lago club in Florida — to crack down on the practice.
'The electric company can't deny you service because it doesn't like your looks, and neither can a bank,' Mr. Brooks said in an interview.
In recent months, the cry of 'debanking' has rung out from conservative and religious groups and the Trump Organization to accuse lenders of politically motivated discrimination. It is coming from cryptocurrency companies that say regulations bar them from opening ordinary bank accounts, and from liberal lawmakers speaking up for individuals and businesses whose A.T.M. cards are shut off without warning.
President Trump and Treasury Secretary Scott Bessent have brought up the issue, and so has Senator Elizabeth Warren, the Massachusetts Democrat. And dozens of state attorneys general have written to the chief executives of major banks demanding answers.
But if there is a political consensus that debanking is a problem, there is less agreement on what to do about it. Or on what it is at all.
The term is most often raised by those who argue that the financial system has locked them out because of their political positions. Those denials can include closing accounts or refusing to provide financing or underwrite loans for certain types of activities.
No legal right to a bank account exists, however. Banks are prohibited from discriminating in lending on the basis of protected factors including race and gender, but are generally permitted to eschew categories of customers deemed too risky, such as adult entertainers or cash-dependent small businesses.
What appears as prejudice to some is, to others, simply a bank's using its discretion to run a profitable business and avoid depositors who raise red flags. Lawmakers say there have been thousands of debanking complaints over the past few years,
'The debanking hysteria is all smoke, no fire,' said Adam J. Levitin, a professor of law and finance at Georgetown University. 'It's a lot of self-serving and unverifiable allegations from risky businesses and customers.'
But even lenders and regulators who hadn't treated these complaints as a priority now say publicly that they are studying it seriously.
The Trump administration told Congress in March that it would cease enforcing an esoteric bank regulatory tool — an assessment of whether a banking activity may harm a bank's reputation — that critics of debanking have assailed.
Administration officials have separately discussed with bank executives and regulators a number of potential moves, including issuing a presidential executive order on the matter and reviving a proposal from the first Trump term that would force large banks to provide 'fair access' to their products, according to two people who have discussed the matter with administration officials but were not authorized to speak publicly.
In a sign of how much the tide has shifted, the same bank lobbying groups that fiercely fought a fair-access rule for the past few years have signaled that they might not object if it is attempted now.
Coal Companies and Debt Collectors
The debanking conversation tracks back to the aftermath of the 2008 financial crisis, when regulators enacted rules to deter banks from lending to risky businesses.
An Obama administration program, Operation Choke Point, cracked down on bank accounts for some payday lenders and gun-related businesses.
The first Trump administration dropped the Choke Point initiative, and Democrats also began arguing that a rash of small-business account closures was evidence that something needed to be done to curb debanking.
In late 2020 the Office of the Comptroller of the Currency, under Mr. Brooks, said it saw evidence that the five largest banks in America — JPMorgan Chase, Bank of America, Citi, Wells Fargo and U.S. Bank — had stopped providing banking services to fossil fuel companies.
In one instance flagged by the attorney general's office for Wyoming, Wells Fargo's website advertised that the lender would deny services to coal mining companies. The web page has since disappeared, and Wells Fargo spokeswomen declined requests for clarification on the bank's current policies.
But other examples commonly cited by conservative media in recent years are disputed, such as the case of Indigenous Advance, a Tennessee Christian charity active in Uganda. The charity, with the help of a religious advocacy group, Alliance Defending Freedom, filed a complaint with the state's attorney general in 2023, arguing that Bank of America had apparently closed its account because the lender disagreed with its religious views.
Bank of America firmly denied that, saying that Indigenous Advance was involved in debt collection and that the bank refuses to serve such entities.
Jeremy Tedesco, senior counsel at Alliance Defending Freedom, said Bank of America had not given that reason when it closed the account but had raised it only four months later, after the media began writing about the case. One thing that isn't disputed: The Tennessee attorney general's office did not pursue the case.
A Personal Matter
For Mr. Trump, the issue appears to be both personal and political.
The first lady, Melania Trump, wrote in her recent memoir that a bank had dropped her and the couple's son, Barron, though she cited no evidence and her office declined to provide any. And in March, the Trump Organization sued Capital One in a state court in Florida, accusing the bank of 'unjustifiably terminating' more than 300 of its bank accounts after the Jan. 6, 2021, attack on the U.S. Capitol because of ''woke' beliefs.'
A Capital One spokesman denied that the bank closed any accounts for political reasons, but declined to provide any other reason for Trump account closures.
A White House spokesman, Harrison Fields, said in a statement, 'The White House is, of course, concerned with the illegal abuse of power by banking institutions and their regulators designed to eradicate conservatives from public life.'
The topic has also given Mr. Trump an opportunity to reward the crypto industry, which contends that it is de facto debanked by regulatory conditions under which banks can open accounts for crypto companies. The industry says these guidelines have made it difficult to engage in even basic banking services.
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In a statement, a Treasury spokeswoman called debanking 'un-American' and said Mr. Bessent had asked regulators to address the issue of 'reputational risk.' Some critics of debanking have said banks should not be allowed to use this risk as justification to refuse banking services to potential customers.
'The Treasury Department remains committed to ensuring that the banking system operates with integrity and provides fair access to Americans.'
Senator Tim Scott, Republican of South Carolina, has advanced a bill that seeks to address debanking concerns directly. The major bank lobbying groups support the bill, which one prominent bank attorney, speaking anonymously to avoid angering policymakers, called 'an exercise in self-preservation.'
The Federal Reserve, too, has said it is looking into the issue. Late last month, the Fed withdrew directives that required banks to notify it before doing business with crypto clients — one of the more hated rules for crypto firms.
And in February, the central bank's chair, Jerome H. Powell, told lawmakers that it had removed language from a manual for its regional reserve banks regarding how they decide which financial companies gain access to the Fed's payments system.
The guidance on these master accounts previously urged the reserve banks to 'consider the conduct of the institution and its leadership and whether association with the institution poses undue reputational risk.' It also raised the issue of whether the institution in question was engaged in 'controversial commentary or activities.'