FDIC Bans “Reputation Risk” Policies Used to De-Bank Conservatives
Last week the FDIC issued a final rule eliminating “reputation risk” policies that financial institutions used as an excuse to debank conservatives.
Individuals and organizations rely on banks and other financial institutions every day, and they expect these institutions to serve everyone regardless of their religious convictions or political positions.
But over the past five years, congressional testimony and news stories have highlighted how federal officials and financial institutions targeted conservative organizations through debanking.
Conservatives deemed “high risk” could have their bank accounts closed without warning and without explanation
Late last year, the Office of the Comptroller of the Currency released a report confirming that America’s nine largest banks systematically debanked customers over their political beliefs.
The OCC’s preliminary findings showed that between 2020 and 2023, JPMorgan Chase, Bank of America, Citibank, Wells Fargo, U.S. Bank, Capital One, PNC Bank, TD Bank, and BMO Bank all maintained policies restricting access to banking services for certain industries.
During the Biden Administration, the U.S. Treasury Department gave 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.
We also now know the U.S. Treasury Department gave banks and other financial institutions guidance that encouraged them to comb through transactions for terms like “Bass Pro Shops,” “Cabela’s,” and “Dick’s Sporting Goods” when looking for “Homegrown Violent Extremism.”
However, last week the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency issued a final executive rule that prohibits financial institutions from debanking conservatives.
The FDIC’s official summary of the rule says:
“Among other things, the rule prohibits the agencies from criticizing or taking adverse action against an institution on the basis of reputation risk. The rule also prohibits the agencies from requiring, instructing, or encouraging an institution to close an account, to refrain from providing an account, product, or service, or to modify or terminate any product or service on the basis of a person or entity’s political, social, cultural, or religious views or beliefs, constitutionally protected speech, or solely on the basis of politically disfavored but lawful business activities perceived to present reputation risk.”
Alliance Defending Freedom Senior Vice President of Corporate Engagement Jeremy Tedesco issued a statement in response to the new rule, saying:
“The FDIC and OCC’s new rule prohibiting the use of ‘reputation risk’ helps close the book on a shameful period where regulators abused their power to threaten law-abiding Americans through their financial institutions. The American people deserve a financial system that provides fair access for everyone, regardless of political or religious viewpoints. Recent history teaches us that regulators have all too often weaponized ‘reputation risk’ to punish viewpoints they disfavor. Americans should have a regulatory system that focuses instead on protecting banks’ safety and soundness, and this move is a big step toward that goal. Alliance Defending Freedom commends the Trump administration, and especially the leadership of the FDIC and OCC, for doing their part to ensure a fair financial system for all Americans.”
This is good news. In 2021 Family Council’s credit card processor — a company owned by JPMorgan Chase — 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 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 60 seconds, Family Council could no longer accept donations online. The processor never explained why we were labeled “high risk.” All we can do is speculate that our conservative principles and our public policy work might have had something to do with the decision to close our account.
Unfortunately, this is not an isolated incident. Other organizations have had similar experiences as well.
It’s worth pointing out that last year, President Trump signed an executive order to protect fair banking for all Americans, and JPMorgan Chase and Bank of America have taken steps to prevent politically motivated debanking.
Family Council is grateful to the many people and organizations who have stood up against debanking in recent years. After all, banks that are too big to fail are also too big to discriminate.
Articles appearing on this website are written with the aid of Family Council’s researchers and writers.
