Small Business Administration to Lenders: Stop Debanking
The Small Business Administration recently sent a letter to 5,000 lenders instructing them to end politicized debanking. Lenders who fail to do so will “lose their good standing” with the SBA and will be subject to additional punitive measures.
Since 2021, congressional testimony and news stories have highlighted how federal officials and financial institutions targeted conservative organizations through “reputational risk” policies. Conservatives deemed “high risk” could have their bank accounts closed without warning and without explanation.
During the Biden Administration, the federal Treasury Department gave banks and financial institutions an analysis titled “Bankrolling Bigotry” that listed legitimate, conservative groups such as Alliance Defending Freedom, the American College of Pediatricians, American Family Association, Eagle Forum, Family Research Council, Liberty Counsel, National Organization for Marriage, and the Ruth Institute as “Hate Groups” alongside the KKK and the American Nazi Party.
The “Bankrolling Bigotry” analysis also outlines ideas on policies and laws aimed at preventing these groups from fundraising. Officials from the Treasury Department distributed this document to banks and financial institutions in January of 2021, calling it an “overview on the funding of American hate groups.”
We also now know the U.S. Treasury Department gave banks and other financial institutions guiding “typologies” — patterns they could use to identify suspicious people or activities — the included search terms and patterns like “TRUMP” and “MAGA.”
The department encouraged financial institutions to comb through transactions for terms like, “Bass Pro Shops,” “Cabela’s,” and “Dick’s Sporting Goods” when looking for “Homegrown Violent Extremism.”
These problems went largely unreported until congress began asking serious questions about debanking.
In recent years, corporate shareholders, state attorneys general, congressmen, federal investigators, and news outlets all have expressed concerns over conservatives being wrongly debanked.
In 2021 Family Council’s credit card processor terminated our account after designating our organization as “high risk.”
At 10:29 AM on Wednesday, July 7, 2021, our office received a terse email from our credit card processor — a company owned by JPMorgan Chase — saying, “Unfortunately, we can no longer support your business. We wish you all the luck in the future, and hope that you find a processor that better fits your payment processing needs.”
Within sixty seconds, our account was terminated and Family Council could no longer accept donations online. The company never explained why we were labeled “high risk.” All we could do was speculate that our conservative principles and our public policy work might have had something to do with the decision.
In 2022, Chase abruptly closed Ambassador Sam Brownback’s bank account for the National Committee for Religious Freedom with little warning or explanation, and PayPal similarly disabled the account of a group called the Free Speech Union.
Stories like these are part of the reason President Trump recently signed an executive order against debanking. The purpose of the order is to guarantee fair banking for all Americans. The Small Business Administration’s new directive tracks with that executive order.
To their credit, JPMorgan Chase has taken steps to prevent religiously-motivated debanking, and Bank of America has finally done the same. That’s a good thing, but more still needs to be done to prevent debanking in the future.
Articles appearing on this website are written with the aid of Family Council’s researchers and writers.
