By Nupur Anand and Saeed Azhar
NEW YORK (Reuters) -Decisions by some major U.S. banks to close accounts were based on rules around reputational risk, people familiar with the matter said, pushing back on President Donald Trump’s accusation that he and his conservative supporters were denied services for political reasons.
Trump on Tuesday renewed his criticism of JPMorgan Chase and Bank of America, saying they discriminated against him by refusing to accept hundreds of millions of dollars in deposits.
While banks have been careful not to contradict the president directly and provoke his ire, two industry sources cited regulations under the former President Joe Biden’s administration that forced them to weigh reputational risks as the reason lenders have dropped clients or avoided others. The sources declined to be identified because of the sensitivity of the matter.
One bank was concerned about this issue when dealing with Trump because of his legal woes during the Biden administration, the first source said.
Spokespeople for JPMorgan and Bank of America both said they do not consider political affiliations in banking decisions and welcomed Trump’s efforts to change regulations.
A source familiar with the matter said that JPMorgan continues to have a banking relationship with members of the Trump family and it also banks a number of campaign accounts linked to Trump.
The White House did not immediately respond to a request seeking comment.
BIDEN ERA RULES
Under the Biden era, regulators who oversaw the banks would judge the lenders’ compliance with the rules, which banks said were based on subjective judgments by government supervisors, the first industry source said.
Banks were also concerned about whether regulators would punish them for providing services to individuals who faced legal proceedings, like Trump, the first and second sources said.
The main U.S. bank regulators — the Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency — have all directed its supervisors this year to stop considering reputational risk when examining banks, a metric that had drawn industry complaints for being too subjective.
“The heart of the problem is regulatory overreach and supervisory discretion,” the Bank Policy Institute, an industry group, said in a statement.
A looming executive order expected as early as this week would instruct regulators to review banks for “politicized or unlawful debanking” practices, according to a draft reviewed by Reuters.
Banks also plan to use the current debate to push the government to clarify anti-money laundering laws and establish a clear federal standard on fair access to financial services, the third source said.
NOT ISOLATED
Trump’s criticism echoed longstanding “debanking” complaints from Republicans, who have accused Wall Street banks of “woke capitalism,” as well as denying services to gunmakers, fossil-fuel companies and others perceived to be aligned with the political right.
Earlier this year, the Trump organization sued Capital One for closing 300 accounts related to the group.
The closures came after thousands of Trump supporters stormed the U.S. Capitol on January 6, 2021.
Capital One declined to comment beyond its earlier legal filings.
Trump also drew headlines in January when he blasted banks for debanking at a gathering of business leaders in Davos, Switzerland.
Paul Chesser, director, corporate integrity project at the conservative-leaning National Legal and Policy Center (NLPC), cited former Kansas Governor and Senator Sam Brownback as among the conservatives who were debanked by JPMorgan and other banks.
Brownback wrote in the New York Post that JPMorgan had abruptly canceled his newly opened account for the National Committee for Religious Freedom in 2022.
The JPMorgan spokesperson said the decision to close the accounts was not related to politics.
“The Senator is fully aware why his accounts were closed,” the spokesperson said, without elaborating on the reasons for the closure.
Brownback told Reuters he had been given five different reasons by the bank for the account closure and was not certain what the final explanation was.
NLPC has raised debanking concerns with BofA and JPMorgan through shareholder proposals, which were not included in the banks’ proxies, Chesser said.
Bank supervision by government regulators is a mostly confidential process that limits banks from explaining to clients why they are declined services.
“Customers should not be in the dark about why they are being de-banked,” said Chesser. “Nobody got any explanation. They’re totally left in the dark. And that is probably the number one priority.”
(Reporting by Nupur Anand and Saeed Azhar in New York, additional reporting by Andrea Shalal, editing by Lananh Nguyen and Sam Holmes)
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