White House Preps Order to Punish Banks That Discriminate Against Conservatives

The president is expected to sign an executive order as soon as this week that targets so-called debanking of businesses including crypto companies.

The White House is preparing to step up pressure against big banks over perceived discrimination against conservatives and crypto companies with an executive order that threatens to fine lenders that drop customers for political reasons.

President Trump

A draft of the executive order, which was viewed by The Wall Street Journal, directs bank regulators to investigate whether any financial institutions might have violated the Equal Credit Opportunity Act, antitrust laws or consumer financial protection laws.

Violators could be subject to monetary penalties, consent decrees or other disciplinary measures, according to the draft.

The order could be signed as soon as this week, according to people familiar with the matter. It is possible the order could get delayed or that the administration’s plans will 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.

Banks have been on edge about potential action by the Trump administration. The Wall Street Journal reported that the administration was considering an executive order in June.

Conservatives for years have accused banks of denying them services on political or religious grounds, and cryptocurrency companies have said they were shut out of banking services under the Biden administration.

Banks, for their part, have said their decisions are driven by legal, regulatory or financial risks, including those stemming from the U.S.’s anti-money-laundering laws. They have blamed regulatory pressure for prior decisions to largely steer clear of the crypto industry.

A Bank of America spokesman said the bank welcomed the administration’s efforts to provide regulatory clarity. “We’ve provided detailed proposals and will continue to work with the administration and Congress to improve the regulatory framework,” he said.

Over the past several months, banks have moved to head off action by the federal government, meeting with Republican attorneys general and updating their policies to clearly state they don’t discriminate on the basis of political affiliation.

The draft of the order viewed by the Journal directs regulators to strike any policies they have that might have contributed to banks dropping certain customers. It also directs the Small Business Administration to review the practices of banks that guarantee the agency’s loans.

Under Trump, banking regulators have said they would stop assessing banks for the so-called reputational risk posed by their customers—a practice that banks have cited for their decisions to avoid certain customers or industries.

The draft order also calls for regulators to refer potential violations to the attorney general in some cases. The Justice Department in April said it was launching a task force in Virginia, to examine allegations of banks refusing customers access to credit or other services based on “impermissible factors.”

Write to Dylan Tokar at dylan.tokar@wsj.com and Alexander Saeedy at alexander.saeedy@wsj.com