Trump order zeroes in on payments
Dive Brief:
In an executive order issued last week, President Donald Trump took aim at payments services, among other financial services provided by banks. He demanded that financial institutions not deny consumers access to payments services, and related services, based on their political views.
The executive order issued Aug. 7 mandates that federal banking regulators should identify consumers to whom financial institutions may have denied payment processing services by way of a 'politicized or unlawful debanking action.' The order also requires that alleged victims of discrimination be notified and given the opportunity to receive the services they were denied.
The order alleged that financial institutions had previously 'engaged in unacceptable practices' to interfere with individuals and businesses seeking to make payments. For instance, people were flagged in the past if they 'made peer-to-peer payments that involved terms like 'Trump' or 'MAGA,' even though there was no specific evidence tying those individuals to criminal conduct,' the order said.
Dive Insight:
Trump's executive order signals his concerns regarding anti-conservative bias in the U.S. financial system. As a result, banking regulators will spend the coming months combing through alleged incidents of discrimination on the basis of political affiliation and religion.
In a CNBC interview days before Trump issued the executive order, the president accused JPMorgan Chase of dropping him as a client and alleged that Bank of America declined to take him on as a customer.
Earlier this year, one of the president's sons, Eric Trump, and four other Trump corporate entities filed a lawsuit against credit card giant Capital One regarding the company's takeover of hundreds of Trump bank accounts in June 2021. The lawsuit alleged the financial institution debanked the plaintiffs' accounts because 'Capital One believed that the political tide at the moment favored doing so.'
Trump's executive order also requires federal banking regulators to review their current complaint data to find financial firms that have 'engaged in unlawful debanking on the basis of religion' and refer such incidents to the U.S. attorney general for 'appropriate civil action.'
'Bank regulators have used supervisory scrutiny and other influence over regulated banks to direct or otherwise encourage politicized or unlawful debanking activities,' Trump said in the executive order. ''Operation Chokepoint,' for example, was a well-documented and systemic means by which Federal regulators pushed banks to minimize their involvement with individuals and companies engaged in lawful activities and industries disfavored by regulators based on factors other than individualized, objective, risk-based standards.'
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