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The Trump administration has drafted an executive order that would direct regulators to fine banks that drop customers for political reasons, The Wall Street Journal reported.
According to the draft, viewed by WSJ, regulators would be directed to investigate if financial institutions have violated the Equal Credit Opportunity Act, antitrust laws or consumer financial protection laws. Violators could face monetary penalties, consent decrees or other disciplinary measures.
The draft order also directs regulators to strike policies they have that may have contributed to banks dropping certain clients, and directs the Small Business Administration to review the practices of banks that guarantee the agency’s loans.
The order may be signed this week, a source told WSJ, although it could potentially get delayed or the administration’s plans could change.
The draft appeared to refer to an instance in 2023 where a Christian nonprofit operating in Uganda accused Bank of America (NYSE:BAC) of shutting down its accounts due to religious discrimination. The bank said the accounts were closed because it doesn’t serve small businesses operating outside the U.S.
The draft also criticized the role that some banks played in an investigation into the January 6, 2021 riots at the Capitol.
Conservatives have long accused banks of debanking customers on political and religious grounds. Meanwhile, cryptocurrency firms claim they were shut out of banking services under the Biden administration.
Banks have said their decisions factored in legal, regulatory and financial risks, including those stemming from anti-money laundering laws.
To note, banks have increased efforts to address political bias concerns. Citigroup (NYSE:C) ended restrictions on providing services for firearm makers, and updated its employee Code of Conduct to ensure no discrimination based on political affiliation.
JPMorgan (NYSE:JPM) agreed to update its Code of Conduct to include language that prohibits discrimination of customers on political and religious grounds.
Bank of America (NYSE:BAC) decided to once again offer services to private prison operator CoreCivic (CXW). The bank dropped the company as a client in 2019, a move that CoreCivic claimed was politically motivated.