President Trump Signs Executive Order to End Debanking  

On August 7^th, 2025,  President Trump issued an executive order aimed at ending the practice of debanking, an insidious trend initiated by regulators pressuring banks to sever account access without notice for law-abiding bank customers on the basis of nebulous criteria such as reputational risk. This practice has been weaponized by the Obama and Biden administrations to actively discriminate against politically disfavored industries such as payday lenders and cryptocurrency firms. The new order will help unwind debanking by removing the tools regulators used to compel banks to debank customers.  

The order details the origins and effects of debanking. It finds debanking to be an unlawful practice that violates the Equal Credit Opportunity Act. Debanking has harmed businesses and individuals based on their political affiliations, religious beliefs, and commercial dealings. It has frozen payrolls, harmed livelihoods, and is incompatible with a free society.  

President Trump’s directive identifies reputational risk as the primary tool of bank supervision responsible for allowing regulators to justify debanking. To that end, the new order directs bank regulators and federal agencies within the Financial Stability Oversight Council to remove reputational risk and equivalent considerations from guidance, examiner manuals, and other documents. Federal agencies are also instructed to rescind existing regulations that could result in politically motivated debanking. Additionally, the Treasury will formulate a comprehensive strategy to combat debanking activities across the federal government.  

While the Treasury and other federal regulators formulate rules and decide on how to best implement President Trump’s objectives, they should understand that debanking was a non-existent issue prior to regulatory interference under the Obama administration. Debanking is a prime example of how regulatory overreach harms businesses and consumers.  

Agencies should fixate on how to rescind as many debanking related tools and rules as possible. Adding new expansive rules that aim to penalize banks for debanking detracts from focusing on agency involvement in debanking. As financial regulators shift away from reputational risk, Congress should simultaneously focus on  updating anti-money laundering laws and the Bank Secrecy Act of 1970. The Treasury’s Financial Crimes Enforcement Network revealed that in 2023, less than one percent of suspicious activity reports filed by banks resulted in an active FBI or IRS investigation. Consequently, the thresholds for suspicious transaction reporting should be raised to limit the number of lawful entities caught in the crosshairs of excessively punitive bank supervision regulations. Outdated laws trigger excessive scrutiny and fail to capture the intricacies of modern banking. 

President Trump should be commended for his efforts to end politically motivated debanking by amping up pressure on regulators to withdraw harmful rules and subjective risk considerations that have been hijacked by left-wing administrations to harm disfavored industries. By dismantling the tools regulators have at their disposal to encourage debanking, President Trump will help secure fair banking for all Americans, regardless of their political affiliation.