President Trump Issues Executive Order on Fair Banking

On August 7, 2025, President Trump issued an executive order titled “Guaranteeing Fair Banking for All Americans” (the Order). The Order, described further in an accompanying fact sheet, seeks to remedy what the administration views as significant harm to individuals and businesses stemming from certain alleged discriminatory practices by banking regulatorsIncluding the Small Business Administration (SBA) and all federal member agencies of the Financial Stability Oversight Council (FSOC) with supervisory and regulatory authority over banks, savings associations, or credit unions, including the Board of Governors of the Federal Reserve System (Federal Reserve or FRB); Federal Deposit Insurance Corporation (FDIC); Office of the Comptroller of the Currency (OCC); Consumer Financial Protection Bureau (CFPB); and National Credit Union Administration (NCUA). (the Agencies) and financial institutions.Including banks, savings associations, credit unions, and other financial services providers subject to the jurisdiction of the Agencies, but generally not including private capital providers. The Order states that these practices have limited access to banking services for certain persons not for “material, measurable, and justifiable risks,” but “on the basis of political or religious beliefs or lawful business activities.”

The Order establishes that it is federal government policy that no person “be denied access to financial services because of their constitutionally or statutorily protected beliefs, affiliations, or political views.” It also calls out allegedly “politicized or unlawful debanking” that adversely affects, either directly or indirectly, those with certain protected beliefs, affiliations, or political views.

The Order makes two principal assertions:

1. Bank regulators have used their supervisory powers and other influence over regulated financial institutions to foster politicized access to banking services and unlawful debanking activities.
2. Financial institutions have restricted access to services on the basis of a customer’s (or prospective customer’s) political or religious beliefs, or engagement with certain disfavored but otherwise lawful business activities.

The Order and fact sheet highlight firearms and digital assets as specific industries that have been the target of discriminatory practices. Historically, the fossil fuel, gambling, and tobacco industries have been linked to alleged debanking and discriminatory practices.

Although no single law or statute makes debanking unlawful, the Order directs the Agencies to take action under “applicable law” prohibiting unfair, deceptive, or discriminatory acts or practices in certain contexts (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 (15 U.S.C. 1691 et seq.) (ECOA)).

Key Directives in the Order

Bank Regulators

• By December 5, 2025, bank regulators must conduct a review to identify financial institutions that have had any past or current, formal or informal policies or practices conducive to politicized or unlawful debanking. They must also:
• Take appropriate remedial action, such as “levying fines, issuing consent decrees, or imposing other disciplinary measures” against any financial institution that has been found to engage in such practices.
• By February 3, 2026, bank regulators must review current supervisory and complaint data to identify any financial institution that has engaged in unlawful debanking on the basis of religion (absent any statutory exemption). They must also:
• Refer any financial institution that has been found to engage in such practices to the Attorney General for “appropriate civil action.”
• By February 3, 2026, bank regulators must update all financial institution guidance documents, manuals, and other materials (not otherwise subject to notice-and-comment rulemaking) to remove the use of reputation risk (or equivalent concepts) that could result in politicized or unlawful debanking. They must also:
• Consider rescinding or amending existing regulations to eliminate or amend any regulations that could result in politicized or unlawful debanking.
• Ensure that a person’s reputation is considered for regulatory, supervisory, banking, or enforcement purposes “solely to the extent necessary to reach a reasonable and apolitical risk-based assessment.”

Small Business Administration (SBA)

• By October 6, 2025, the SBA must notify all financial institutions subject to its jurisdiction and supervision that within 120 days of the Order, or December 5, 2025, the financial institutions must:
• Make reasonable efforts to identify any previous clients of the financial institution (or any of its subsidiaries) that were denied service through politicized or unlawful debanking and reinstate such clients, with notice of the reinstatement sent to the clients.
• Identify any potential clients of the financial institution (or any of its subsidiaries) that were denied service through politicized or unlawful debanking practices and notify adversely affected prospective clients of the denied access and their option to engage in such services previously denied.
• Identify any potential clients of the financial institution (or any of its subsidiaries) that were denied payment processing services through politicized or unlawful debanking practices and notify adversely affected prospective clients of the denied access and their option to engage in such services previously denied.

Treasury

• By October 6, 2025, the Secretary of the Treasury, in consultation with the Assistant to the President for Economic Policy, must develop a comprehensive strategy for further measures across the federal government, including legislative or regulatory options, “to combat politicized or unlawful debanking activities of financial regulators and financial institutions.”

Larger Political Trends

Federal and state authorities have recently targeted potentially unlawful corporate pursuit of political or social objectives. For instance, consistent with the Order’s reference to the Federal Trade Commission Act, government authorities, including the House Judiciary Committee and various state attorneys general, have initiated investigations of financial institutions alleging violations of US antitrust laws in connection with their membership in various “net zero” memberships, which those authorities believe may lead to discrimination against certain carbon-intensive industries.

In January 27, 2025, the Texas Attorney General sent a letter to various banks requesting information relating to potential violations of federal and state laws. In the letter, the Texas AG questioned why the banks agreed to adjust fees based on certain race- and sex-based key performance indicators. Although the letter does not cite ECOA — which prohibits discrimination by regulated financial institutions in the extension of credit based on protected characteristics including religion, race, and sex — sustainability-linked loans keying interest rate or fee reductions or increases based on such protected characteristics could fall under the ECOA portion of the Order.

On April 28, 2025, the Department of Justice announced the formation of the Eastern District of Virginia Equal Access to Banking Task Force. The task force will investigate allegations of debanking, which the announcement defines as “when banks refuse customers access to credit and other financial services based on impermissible factors under current federal and state law.” The task force will focus on alleged debanking in Virigina and, “if appropriate, seek[] civil relief against banking institutions in federal or state court.”

This US political trend contrasts with certain banking and political trends in Europe and other global jurisdictions. How compliance with these broader global trends, which could necessitate changes in business and customer models, can coexist with the fair access requirements of the US federal government and certain state governments will require careful planning.

Statements in Support of the Order

Various agency and congressional committee heads issued statements applauding the Order and vowed to carry out its objectives. For example:

• Comptroller of the Currency Jonathan V. Gould stated that pursuant to the Order, the OCC plans to review whether supervised institutions have or are engaged in politicized or unlawful debanking. He noted that the OCC has already removed references to reputation risk from its handbooks and guidance documents and plans to “propose a rule removing these same references from its regulations.”
• FDIC Acting Chairman Travis Hill stated that pursuant to the Order, the FDIC plans to review whether supervised institutions have or are engaged in politicized or unlawful debanking. He noted that the FDIC “plan[s] to issue a rulemaking that would prohibit examiners from criticizing institutions on the basis of reputational risk or directing or encouraging institutions to close accounts on the basis of political, social, religious, or other views.”
• Senate Banking Committee Chairman Tim Scott stated that in addition to recently leading the passage of legislation (the Financial Integrity and Regulation Management (FIRM) Act) to curtail the use of reputation risk as a factor in the supervision of depository institutions, he is committed to further “work[ing] with President Trump to end the debanking of law-abiding Americans and federally legal businesses on the basis of their political or religious affiliations.”
• House Financial Services Committee Chairman French Hill stated that the committee will continue to “investigate and prevent debanking for lawful businesses.”

Banking industry groups, for their part, publicly supported the policies underpinning the Order (if not the directives that may result in their members’ risk management decisions being subject to agency steering, inquiry, or even potential fines or civil actions). For example:

• The American Bankers Association, Bank Policy Institute, Consumer Bankers Association, and Financial Services Forum issued a statement stating that the Order “helps ensure all consumers and businesses are treated fairly, a goal the nation’s banks share with the Administration.” They shifted focus, however, to the “regulatory overreach, supervisory discretion and a maze of obscure rules” that have “stood in the way” of banks’ ability to provide financial services to “as many customers as possible.”
• These groups also published a set of principles that policymakers could consider as they work to implement the Order. The principles suggest that federal requirements must broadly and expressly preempt any non-federal fair access or account closure laws to avoid inconsistent requirements affecting customers across all 50 states.
• The Independent Community Bankers of America (ICBA) issued a statement emphasizing community banks’ commitment to ensuring fair access to banking services for a wide range of consumers. However, the ICBA noted that it continues to “support[] the ability of banks to make individualized decisions about customer relationships based on sound risk management and legal compliance, which must be left to the discretion of banks, not regulators.”

Digital Assets in Focus

President Trump has been an active supporter of the digital assets industry, beginning with the January 23, 2025, executive order titled “Strengthening American Leadership in Digital Financial Technology” (for more information, see this Latham blog post).

One of the aims of this executive order is to “protect[] and promote[] fair and open access to banking services for all law-abiding individual citizens and private-sector entities alike.” This is likely a reference to the difficulties that digital asset market participants reportedly faced when attempting to obtain access to banking services for digital asset-related products and services, commonly referred to in the industry as “Operation Choke Point 2.0.”

According to the fact sheet for the current Order, the administration “has already ended Operation Choke Point 2.0 once and for all by working to end regulatory efforts that deny banking services to the digital assets industry.”

Fair Access: Past, Present, and Future

Even before the Order was published, the Agencies have been complying with its policy underpinnings, insofar as debanking and the elimination of reputation risk has been a priority for the administration since President Trump took office in January.For more information on US federal and state fair access laws, see this Latham Client Alert. The Agencies have also been taking action to update guidance and examination programs, and issue proposals for notice-and-comment rulemaking to eliminate politicized or unlawful debanking practices in line with the Order. Specifically:

• On March 20, 2025, the OCC announced that it was no longer examining its regulated institutions for reputation risk and was “removing references to banks’ reputation risk from its Comptroller’s Handbook booklets and guidance issuances.”
• On April 8, 2025, FDIC Acting Chairman Hill announced that the FDIC was “working on a rulemaking related to reputational risk that would prohibit FDIC supervisors from (1) criticizing or taking adverse action against institutions on the basis of reputational risk and (2) requiring, instructing, or encouraging institutions to close, modify, or refrain from offering accounts on the basis of political, social, cultural, or religious views.” He added that the FDIC was “exploring additional ideas to comprehensively put an end to debanking.”
• On June 23, 2025, the FRB announced that reputation risk will no longer be a component of examination programs in its supervision of banks and issued a revised version of its “Guidelines for Rating Risk Management at State Member Banks and Bank Holding Companies,” removing all references to reputation risk.

What the Order adds to these actions is its direction to the Agencies to review specific financial institutions for any past or current, formal or informal policies or practices that may be categorized as discriminatory or unlawful debanking. Special scrutiny may be applied for perceived discriminatory or unlawful debanking of individuals for particular political or religious beliefs, or of industries such as digital assets and firearms.

In this regard, with respect to national banks and federal savings associations, including the nation’s largest, the OCC may choose to revisit and rely on the broad interpretation of Dodd-Frank that it employed in finalizing its 2021 “Fair Access to Financial Services” rule (2021 Fair Access Rule). Comptroller of the Currency Gould was senior deputy comptroller and chief counsel of the OCC during the first Trump administration, when the 2021 Fair Access Rule was proposed and finalized.

• The 2021 Fair Access Rule aimed to prevent large banks from denying financial services to certain industries based on factors like religious, political, or social views. The OCC argued that the Dodd-Frank Act’s amendments to the National Bank Act (12 U.S.C. 1), which added “fair access to financial services, and fair treatment of customers” to the OCC’s mission, provided a basis for the rule. However, when the Biden administration took office, the OCC announced it was pausing publication of the rule, and the rule never went into effect. However, the announcement noted that “[t]he OCC’s long-standing supervisory guidance stating that banks should avoid termination of broad categories of customers without assessing individual customer risk remains in effect.”

The OCC may thus conduct reviews of supervised financial institutions pursuant to the Order by examining:

• whether the financial services offered were “available to all persons in the geographic market served by the bank on proportionally equal terms”;2021 Fair Access Rule, p. 7-8.
• the application of “quantitative, impartial risk-based standards”Id. at p. 3, 14. for providing or denying services, rather than subjective standards;
• evidence-based assessment of risk (“justified and documented by measurable, empirical, quantifiable data”);Id. at p. 8.
• risk management “based on an analysis of the risk factors unique to ... individual customer[s]” rather than denial of service based on entire industry categories;Id. at p. 7. and
• whether denial of service resulted in preventing, limiting, or disadvantaging certain persons from entering or competing in a market, or benefited the financial institution.Id. at p. 8.