The White House is about to unveil a new executive order that would punish big banks who discriminate against conservatives and crypto companies.
A draft of the order seen by the WSJ directs bank regulators to investigate whether any financial institutions may have violated the Equal Credit Opportunity Act, antitrust laws, or consumer financial protection laws – with violators facing monetary penalties, consent decrees or other disciplinary measures, according to the draft.
People familiar with the EO told the Journal that it could be signed as soon as this week, though the order could become delayed or the administration’s plans may change.
The draft order doesn’t name any specific banks but appears to refer to an instance where Bank of America was accused of shutting down the accounts of a Christian organization operating in Uganda based on the organization’s religious beliefs. The bank has said it shut down the accounts because it doesn’t serve small businesses operating outside the U.S.
The draft order also criticizes the role that some banks played in an investigation into the Jan. 6, 2021, riots at the U.S. Capitol. -WSJ
As Cointelegraph notes, conservatives have also claimed that banks have denied them services based on political beliefs.
The banking industry calls the practice “derisking,” and financial institutions have broad discretion to close accounts, whether the account holder poses a legal, financial or reputational risk to the firm.
The Federal Reserve said in June that it would stop examining for reputational risk following similar moves made by the Office of the Comptroller of the Currency and the FDIC.
Crypto, meanwhile, was long in the crosshairs of the Biden administration – in what industry executives have alleged was an effort to cut crypto off from the financial system by using regulators to pressure banks into backing away from clients involved in digital assets.
As the outlet reports further, the reported draft order directs bank regulators to scrap any of their policies that may have contributed to banks dropping some customers, such as crypto firms.
It also directs the US government’s Small Business Administration to review banking practices that guarantee the loans made by the agency to small businesses.
The order asks regulators to refer some of the potential violations to the attorney general for the Department of Justice to follow up.
The Journal reported in June that the White House was planning for Trump to sign a similar order aiming at stopping banks from cutting off services to industries such as crypto.
“Operation Choke Point 2.0” claims
Crypto executives have claimed that former President Joe Biden began to cut off their industry from banking in late 2022 after the collapse of FTX, with the crypto exchange being revealed as a massive fraud.
Coinbase chief legal officer Paul Grewal testified at a Congressional hearing in February that the Biden-era Federal Deposit Insurance Corporation (FDIC) “bludgeoned the banks” with examinations and questions around crypto and stablecoins until they “relented under the pressure.”
A Coinbase-supported Freedom of Information Act lawsuit against the FDIC showed the agency asked certain financial institutions to pause crypto banking activities, which Grewal said showed the industry’s claim “wasn’t just some crypto conspiracy theory.”
Crypto venture capitalist Nic Carter coined the term “Operation Choke Point 2.0” in February 2023 to describe the perceived debanking phenomenon, taking inspiration from the Justice Department’s “Operation Choke Point” against banks and payday lenders in the 2010s.
Loading recommendations…