A conservative think tank is pushing for changes in financial regulations that they say let the government pressure banks to sever ties with groups that don’t align with their views. The America First Policy Institute (AFPI) released a report on Thursday titled “Debanked: When Political Bias Trumps Financial Judgment.” This paper outlines five proposals aimed at stopping government regulators from using their power to influence banks for political reasons.
According to the report, debanking creates a sort of unofficial blacklist. This blacklist affects individuals and organizations that lose access to banking services, making it hard for them to regain that access. The report’s authors, Jill Homan and David Vasquez, argue that this practice leads to uncertainty and hardship. They emphasize that when government officials use their power in ways not authorized by Congress, it undermines the justice system.
Former President Donald Trump echoed similar concerns earlier this year, highlighting the significant influence regulators have over banks. He noted that regulators can effectively control banks more than the bank presidents themselves.
The issue of debanking gained attention in 2013 when the Obama administration initiated “Operation Choke Point.” This operation aimed at companies seen as high-risk for fraud, but it was criticized for pressuring banks to cut ties with businesses like firearms dealers. The Biden administration continued this trend with what some are calling “Operation Choke Point 2.0,” focusing on the cryptocurrency industry.
Beyond firearms and crypto, religious groups and conservative organizations have also faced challenges due to government actions. The AFPI report suggests several policy changes to prevent future instances of debanking. One key recommendation is the Financial Integrity and Regulation Management Act. This proposed legislation aims to eliminate the vague criteria of “reputational risk” that regulators currently use to evaluate banks. Instead, it would require regulators to focus solely on objective financial criteria.
The report also calls for a national standard for fair access to banking. This would help avoid the confusion created by different state laws on debanking. Additionally, it suggests that banks should notify customers and provide reasons before ending any banking relationships, promoting transparency in the process.
The authors of the report believe that both the current administration and Congress have a chance to address these issues. They argue that by reducing subjective criteria in regulations, they can significantly lessen the impact of government-driven debanking across the country.
