On Thursday, August 7, 2025, President Trump issued a new Executive Order (EO), “Guaranteeing Fair Banking for All Americans,” that directs at least 10 federal financial regulators to root out so-called “politicized or unlawful debanking” practices across the financial sector. Additionally, the EO mandates those regulators identify and, if appropriate, punish companies that have engaged in politicized or unlawful financial services activities.
The EO has roots in years of scrutiny from Congress, state attorneys general, and others into alleged instances of financial services firms debanking and/or denying services to individuals and businesses based on the individuals’ and businesses’ perceived political or religious beliefs, as well as engagement in certain industries, such as digital assets, firearms sales, and oil and gas companies, which may be perceived as “disfavored” by banking and financial services regulators.
By bringing the entire federal financial regulatory apparatus to bear on the issue of “debanking,” the administration is flipping the script: the EO signals a new era of federal oversight with close coordination between regulators and senior White House officials, and possibly an enduring feature of this administration’s policymaking efforts.
As the agencies take actions to implement the EO’s directives, covered financial companies may face near- and long-term supervisory challenges and enforcement risks. For example, financial institutions may receive burdensome informational requests in connection with agency lookbacks at prior actions taken by the institutions they supervise and regulate. Institutions may wish to also consider the extent to which they have previously and continue to use reputational risk, as applicable, to make financial decisions, as Congress as well as the federal regulators may ramp up examination of alleged unlawful debanking acts.
Who Is Affected
Although most of the headlines about the EO have focused on allegations concerning several very large financial institutions and banks, the EO’s mandate is broad. It is directed at any politicized or unlawful debanking acts allegedly taken by any “bank, savings association, credit union, or other financial services provider” that limit access to, or adversely modify the conditions of customers’ “accounts, loans, or other banking products or financial services.”
Further, when understood as a broader policy statement to scrutinize the potential politicization of financial services, any agency directed to advance the policy can be expected to use that agency’s tools and jurisdiction to do so. According to the EO, financial institutions within the jurisdiction of the following agencies may face questions and consequences (including disciplinary measures) related to debanking activities:
- Small Business Administration (SBA),
- Department of the Treasury (Treasury),
- Board of Governors of the Federal Reserve System (FRB),
- Office of Comptroller of the Currency (OCC),
- Consumer Financial Protection Bureau (CFPB),
- Securities and Exchange Commission (SEC),
- Federal Deposit Insurance Corporation (FDIC),
- Commodity Futures Trading Commission (CFTC),
- Federal Housing Finance Agency (FHFA), and
- National Credit Union Administration (NCUA).
“Debanking” According to the Executive Order
The EO sets an administration policy to prohibit any alleged politicized and unlawful debanking activities. It targets the denial of financial services on the “basis of the customer’s or potential customer’s political or religious beliefs, or on the basis of the customer’s or potential customer’s lawful business activities that the financial service provider disagrees with or disfavors for political reasons.”
The EO’s preamble and corresponding Fact Sheet reference several episodes of alleged unlawful debanking, which provide insight into the administration’s thinking.
For example, the EO highlights the President’s statements that major banks declined to take deposits from his companies following his first term, as well as his allegations that a banking institution denied payment processing services for a Republican Party event. The EO also references “Operation Chokepoint”—a 2013 initiative whereby “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,” from payday lenders to firearms merchants—as well as “Operation Chokepoint 2.0”—a Biden administration alleged effort to debank the digital assets industry (particularly cryptocurrency).
Key Executive Order Provisions
Sections 4 and 5 of the EO set out its two key initiatives: remediating instances of debanking for clients of companies covered by the SBA; and launching a wide investigation and disciplinary review across financial regulators.
First, under Section 4, the EO requires that
- By February 2026, all covered agencies should remove the “use of reputation risk or equivalent concepts that could result in politicized or unlawful debanking” from their guidance, manuals, and other materials (excluding regulations or other materials requiring notice-and-comment), to the greatest extent permitted by law.
- By December 2025, financial institutions whose loans are guaranteed by the SBA must make reasonable efforts to identify and reinstate any clients, or potential clients, who were denied access to financial services or payment processing services as a result of a “politicized or unlawful debanking action” in violation of section 7(a) of the Small Business Act or certain SBA policies.
Section 5 in turn establishes a broad review and investigative process across the covered federal financial services regulators:
- By February 2026, the Secretary of the Treasury and the President’s Assistant for Economic Policy will develop a “comprehensive strategy for further measures to combat politicized or unlawful debanking activities of financial regulators and financial institutions across the Federal Government, including consideration of legislative or regulatory options to eliminate such debanking.” There are several pieces of debanking-focused legislation moving through Congress, which may see renewed interest in the coming months in the wake of the EO’s release.
- By December 2025, each covered regulator is directed to “conduct a review to identify financial institutions . . . that have had any past or current, formal or informal, policies or practices that require, encourage, or otherwise influence such financial institution to engage in politicized or unlawful debanking.”
- Based on those reviews, regulators are directed to “take remedial action”—e.g., levy fines, issue consent decrees, or impose “other disciplinary measures”—against financial institutions subject to that regulator’s jurisdiction that violates applicable law, “including section 5 of the Federal Trade Commission Act (15 U.S.C. 45), section 1031 of the Consumer Financial Protection Act (12 U.S.C. 5531), and the Equal Credit Opportunity Act[.]”
- Finally, by February 2026, covered regulators are required to review data to identify institutions that engaged in unlawful debanking on the basis of religion in violation of the Equal Credit Opportunity Act, and to refer those matters to the Department of Justice.
In recent months, federal regulators have already taken steps to revise their guidance, policies and supervisory frameworks to address some of the policy initiatives formalized in the release of the EO. For example, federal banking regulators have taken steps to remove reputational risk as an examination and regulatory factor considered by the regulators in their supervisory capacities.
In all, the EO establishes a broad, multi-agency, administration-wide policy to proactively scrutinize financial institutions’ past and current conduct, in order to investigate and, potentially, take disciplinary action against institutions who have or are engaged in politicized and unlawful debanking acts and activities.
Recommendations
In the early days following the EO, institutions may consider taking a broad view as to what companies may be seen as “financial institutions” as well as what activities and actions may be considered “politicized or unlawful debanking.” The administration’s plan, as set forth in the EO, is comprehensive and sweeping, leveraging the authority of the entire federal financial regulatory apparatus to bring regulatory, investigative, and reputational pressures on financial account/services conduct perceived to be politicized and/or unlawful forms of debanking. And while we can expect federal regulators to operate through their traditional supervisory tools, such as examinations and enforcement actions, we can also expect that these regulator-institution engagements may pose novel and challenging as regulators make efforts to implement the policy outlined in the EO. These inquiries will need to be managed with care, and companies should consider retaining counsel who can navigate every aspect of what agencies may pursue.
The playbook for analyzing risks of allegedly politicized or unlawful debanking is bespoke and specific to each covered firm. Assessing compliance with relevant statutes and regulations is only the first step; indeed, companies should additionally consider the context and remain mindful that their actions and activities may be judged against an evolving politicized framework.
