OCC Report Finds Banks Restricted Services Based on Political Beliefs

The Office of the Comptroller of the Currency concluded that banks applied vague reputational risk criteria to deny services based on political or social beliefs rather than objective financial risk. The OCC released a 47-page follow-up report on Wednesday after reviewing nine banks under its purview and nearly 100,000 related complaints. It found a systematic effort within the banking sector to restrict access for politically sensitive industries through public and nonpublic policies.

The regulator determined that broad reputational risk policies lacked clear standards and objective, risk-based criteria. This lack of objective criteria effectively shut out legitimate customers and businesses based on ideological leanings. The OCC stated that these practices disadvantaged certain Americans.

Specific cases reveal targeted restrictions across industries

The report documented denials to oil and gas, tobacco, detention facilities, and specific nonprofits and retailers based on ideological alignment. Lenders restricted access to financial services for several industries.

JPMorgan repeatedly denied services to a conservative-leaning retailer from 2021 to 2023. The OCC cited internal bank documents stating that as more far-right competitor companies stepped in to take the company's extreme clients, it might become more mainstream and more appropriate for JPMorgan to bank them.

TD Bank denied a COVID-era emergency loan to a nonprofit that took an anti-immigration stance. The OCC asserted the loan denial was influenced by the nonprofit’s status as a hate group, according to the Southern Poverty Law Center. In a separate case, Capital One rejected an organization that supported reproductive rights including abortion access. The OCC cited a risk employee at Capital One who noted the organization’s contributions to politicians were about 95% Democrat.

Banks acknowledge pressure but defend policies

Several banks named in the report told investors over the past year they were responding to requests from federal agencies regarding discontinuation of financial services against certain customers. JPMorgan Chase said its policies prohibit discrimination based on political or religious views. The bank stated it has improved the way it does business.

JPMorgan also agreed with the administration on a broader point. It said years of operating in a regulatory environment that often second-guessed decisions contributed to a culture of caution across the banking industry, and that system needs fixing.

Regulators signal action amid political backlash

The OCC and Consumer Financial Protection Bureau pledged further scrutiny and potential enforcement. Comptroller of the Currency Jonathan Gould said notwithstanding certain efforts by the largest banks to rein in these practices, he is not confident they will be enough. Gould said the OCC will be assessing further changes to the regulatory and supervisory framework to reduce the likelihood of these harmful practices recurring.

The CFPB said it will fully investigate whether the institutions featured in the OCC’s report and others have complied with federal consumer financial laws and take appropriate action. CFPB Acting Director Mark Paoletta called it appalling that these banks targeted American consumers for their political, social, or religious beliefs that did not align with the Biden Administration or its leftist allies. He said these thuggish tactics have no place in America. The bureau is reviewing consumer complaints and supervisory data for evidence of wrongful debanking and is investigating based on those data points.

Debanking has been a hot-button issue for President Donald Trump since he returned to the White House. During the first week of his second term, Trump publicly accused Bank of America and JPMorgan of unfairly denying services to conservatives. He has since sued both JPMorgan and Capital One on similar grounds. The Trump administration has voiced growing concerns over debanking and the use of the financial system to achieve social and political objectives.

Industry responds with calls for clearer standards

All nine banks reported having reassessed the role of reputation risk in decisions to accept or terminate new customers. Several banks said they had minimized reliance on reputation risk. Bank employees now must consider reputation risk in the context of other financial or business consequences, including credit risk, money laundering, and terrorist financing risk.

The Bank Policy Institute, a lobbying group representing the banks, issued a statement supporting efforts to establish clear and consistent standards that promote access while maintaining sound risk management. It referenced the administration's recent efforts to prioritize supervisory attention on material financial risk rather than reputational risk. The OCC will assess further changes to the regulatory and supervisory framework to reduce the likelihood of harmful practices recurring.