US bank regulator issues guidelines to avert ‘debanking’

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WASHINGTON (Reuters) – A top U.S. banking regulator said Monday it was rolling out new guidance to discourage banks from cutting off, or “debanking,” customers on political and religious grounds, a month after President Donald Trump directed oversight agencies to scrutinize banks for political bias.

The Office of the Comptroller of the Currency (OCC) said in a statement it had issued two bulletins explaining how it would scrutinize bank policies for avoiding such discrimination and how banks should limit sharing of customer data in reporting suspicious activity to government authorities. 

The OCC is the primary regulator for the nation’s largest banks, which hold the lion’s share of consumer deposits.

Comptroller of the Currency Jonathan Gould said his agency was moving to stop the “weaponization” of the financial system.

“Individuals may have been targeted and surveilled based on where they shop or what they believe in and, in some cases, unlawfully debanked,” he said. 

The White House and conservatives have accused financial institutions of seeking to silence right-leaning political speech and activities by closing customer accounts and avoiding conservative businesses.

Trump last month also accused JPMorgan and Bank of America, without citing evidence, of refusing his deposits on political grounds. Neither bank directly addressed his claims, but JPMorgan said it did not close accounts for political reasons.

A Reuters analysis shows that few consumers have lodged complaints about debanking in recent years.

The OCC said it had clarified how it would review policies on preventing politicized debanking when reviewing banks’ licensing applications and assessing their compliance with the Community Reinvestment Act, a law intended to prevent discrimination in lending.

(Reporting by Douglas Gillison in Washington; Editing by Nia Williams)