White House to target banks as Trump claims discrimination
Trump also said the country's top two lenders had previously rejected his deposits, ramping up his attack on the industry.
"They totally discriminate against, I think, me maybe even more, but they discriminate against many conservatives," he told CNBC in an interview.
Trump made the comments when asked about a report by the Wall Street Journal that said he planned to punish banks that discriminated against conservatives, but did not address the order specifically.
The executive order instructs regulators to review banks for "politicized or unlawful debanking" practices, according to a draft reviewed by Reuters. It is likely to be announced on Wednesday, an industry source said.
"They did discriminate," Trump said of actions taken by JPMorgan after his first term in office. "I had hundreds of millions, I had many, many accounts 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's latest criticism adds pressure on America's largest lenders. The order would likely require banks to conduct sweeping reviews of their businesses to comply with regulations.
Trump said, without providing evidence, that the banks' refusal to take his deposits indicated that the administration of former President Joe Biden had encouraged regulators to "destroy Trump."
Trump said he subsequently tried to deposit funds with BofA and was also refused, and eventually split the cash.
"I ended up going to small banks all over the place," he said. "I was putting $10 million here, $10 million there, did $5 million, $10 million, $12 million," he said, without naming the lenders.
"I have them all over the place, the craziest thing, and it's lucky I even had them. They were doing me a favour, and that's because the banks discriminated against me very badly, and I was very good to the banks."
In a statement, JPMorgan did not address the president's specific claims about his account.
"We don't close accounts for political reasons, and we agree with President Trump that regulatory change is desperately needed," JPMorgan said. "We commend the White House for addressing this issue and look forward to working with them to get this right.'
BofA also did not address Trump's specific claims.
During Biden's administration, regulators were able to scrutinize banks' decisions on the basis of reputational risks, a second source familiar with the matter said.
Lenders were under intense scrutiny and pressure to weigh reputational risks when dealing with Trump because of his legal woes, a third source said.
JPMorgan continues to have a banking relationship with members of the Trump family that dates back years, and it also banks a number of campaign accounts linked to Trump, the third source said.
After Trump took power, the Federal Reserve announced in June it was directing its supervisors to no longer consider reputational risk when examining banks, a metric that had been a focus of industry complaints.
The Wall Street Journal reported late Monday that the expected executive order would instruct regulators to investigate whether any financial institutions breach the Equal Credit Opportunity Act, antitrust laws or consumer financial protection laws by dropping customers for political reasons.
The order could authorize monetary penalties, consent decrees or other disciplinary measures against violators, according to the draft.
The White House had no immediate comment on the reported order.
"What the White House is doing is telling the banks not to hide behind regulations to deny loans or banking relationships," said Wells Fargo bank analyst Mike Mayo. "Banks can use their normal underwriting standards and deny services, but not blame regulators or use reputational risk as a justification."
BofA said it welcomed the administration's efforts to clarify the policies.
"We've provided detailed proposals and will continue to work with the administration and Congress to improve the regulatory framework," the bank said.
Trump in January admonished the CEOs of JPMorgan and BofA for denying services to conservatives. At the time, the two banks denied making banking decisions based on politics.
Banks have consistently argued that any complaints about "debanking" should be aimed at regulators, as they argue onerous rules and overzealous bank supervisors can discourage them from engaging in certain activities.
"The heart of the problem is regulatory overreach and supervisory discretion," the Bank Policy Institute, an industry group, said in a statement.
Lenders have held discussions around debanking and weighed scenarios around a potential order, the first source said.
Banks are also hopeful the administration may change anti-money laundering laws that they say are outdated and burdensome, the source added.
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