JPMorgan and Bank of America ‘debanked’ Trump under pressure from Biden admin: Sources
JPMorgan and Bank of America have made headlines recently for “debanking” former President Trump following his role in the January 6 Capitol Hill incident. The decision to cut ties with Trump came after pressure from the Biden administration’s banking regulators and the Federal Reserve, according to sources familiar with the situation.
The exact reasons for Trump’s accounts being closed by JPMorgan and denied by Bank of America have not been disclosed. However, it is believed that the controversy surrounding Trump’s actions on January 6 played a significant role in the banks’ decision. The Biden administration’s regulators reportedly warned the banks that doing business with Trump posed a reputational risk and could potentially violate rules prohibiting financial institutions from working with individuals or companies deemed risky.
Sources at the banks revealed that regulators like the Office of the Comptroller of the Currency, the FDIC, and the Federal Reserve have been using the reputational risk clause to target individuals with political or business ties that do not align with their standards. This has led to the inclusion of conservatives and participants in the January 6 protests in the debanking process.
Despite being debanked, Trump has since embarked on his second presidential term and is determined to address the issue of debanking. His administration has stopped enforcing the reputational risk clause and plans to issue an executive order to put an end to politically motivated debanking.
Banking executives shared that regulators instilled fear in banks by threatening increased surveillance and fines for working with individuals like Trump. As a result, banks found it easier to avoid taking on customers who posed reputational risks, even if they were high-net-worth individuals like Trump.
While Bank of America declined to comment on the situation, JPMorgan stated that they do not close accounts for political reasons and support Trump’s call for regulatory change. Trump himself confirmed being debanked in a recent interview, where he expressed disappointment in both JPMorgan and Bank of America for refusing to defend him.
As Trump and his regulators push to end politically motivated debanking, Senator Tim Scott is advocating for legislation to outlaw such practices. The debate surrounding debanking and reputational risk continues to be a contentious issue in the banking industry, with implications for individuals and institutions alike.
