Federal Regulators Ramp Up Response to White House Action on Debanking

On Aug. 7, 2025, the White House issued Executive Order 14331, “Guaranteeing Fair Banking for All Americans,” which directed federal financial regulators to curb debanking practices that restrict “law-abiding individuals’ and businesses’ access to financial services on the basis of political or religious beliefs or lawful business activities.”  The order also directed the federal banking agencies to eliminate reputation risk from existing guidance “to the greatest extent permitted by law” as a consideration that could encourage banks to engage in debanking practices. Further, the mandate  encouraged federal regulators to take remedial action against financial institutions deemed to have engaged in “politicized or unlawful” debanking, including levying fines or taking other supervisory action. 

Debanking refers to the practice of financial institutions denying, restricting or closing access to banking services for certain current or prospective customers. While banks may exit customers due to legal, regulatory or risk-based reasons, the term is frequently used in public debate to describe situations where lawful individuals, businesses or organizations lose banking access due to perceived reputational concerns, political or religious views, or involvement in controversial but legal industries. Policymakers and regulators have increasingly viewed debanking as a threat to financial inclusion, transparency and fairness.

The Office of the Comptroller of the Currency (OCC) has already translated the executive order into specific supervisory expectations. In a Sept. 8, 2025 release, the OCC announced that it will consider a bank’s record and policies for avoiding politicized or unlawful debanking when reviewing licensing applications (mergers, new activities and charters) and in Community Reinvestment Act (CRA) evaluations. This release marked a notable expansion of supervisory focus since the OCC effectively made fair treatment of customers a factor in regulatory approvals that are central to bank growth strategies.

The OCC guidance emphasized that banks must document the reasoning behind account closures, ensure that decisions are traceable to legitimate prudential or compliance obligations and eliminate vague references to reputational risk as a basis for exiting customers. The OCC also stressed that examiners will be trained to look for patterns of account closures that could signal bias against lawful industries or viewpoints. Institutions that fail to demonstrate a fair banking record could face not only supervisory criticism but also delays or denials in licensing or other requests.

By embedding debanking oversight into both licensing and the CRA exam process, the OCC has moved beyond soft guidance and into direct regulatory leverage. The CRA link is especially significant, since a poor CRA exam may affect a bank’s standing in the local community and can be decisive in merger reviews. Taken together, the OCC’s actions give regulators stronger tools to enforce fair access principles while preserving banks’ ability to manage genuine legal and compliance risks.

The executive order will also impact banks that participate in Small Business Administration (SBA) lending programs. In response, the SBA has directed banks to identify lending denials that were based on debanking factors and reinstate past customers or advise prospective customers that they will have another opportunity to obtain an SBA loan. SBA lenders must complete a debanking review by Dec. 5, 2025, and report the results to the SBA by Jan. 5, 2026.

Although specific guidance has not emerged from the Consumer Financial Protection Bureau (CFPB), financial institutions and fintech firms can expect heightened scrutiny of debanking concerns through the agency’s enforcement process. The executive order specifically cites the CFPB’s authority to policy unfair, deceptive or abusive acts or practices under the Consumer Financial Protection Act as a basis for policing debanking violations. CFPB staff has already been asked to review current and past investigations where evidence of debanking was present, including information related to the entity’s reasons for refusing to open, freezing or closing a customer account.

Going forward, bank compliance officers should assume that examiners will ask for a contemporaneous paper trail on account denials and closures, and banks should implement a clear process to track and support actions that deny banking services to groups or individuals. A financial institution that debanks a current or prospective customer should be prepared to detail the risk factors that triggered the decision, the link between those factors and safety and soundness requirements, and to demonstrate that similarly situated customers are being treated consistently.

Consumers and small businesses that are debanked cannot rely on an executive order to create private right of action against financial institutions. However, the order does provide them with significant leverage since many complaints about debanking will now be aligned with federal policy. It is likely that customers previously at risk of debanking will see banks adopt specific advance notice requirements, an appeals process and transition support for customers affected by a debanking decision.

The coming months should clarify how rapidly and how far the agencies move on the revision of existing guidance and the incorporation of the executive order mandate into the examination process. But the order has elevated a political slogan into a supervisory priority, and financial institutions should act now to review internal guidelines and practices to improve alignment with the mandate and anticipate changes to guidance and supervision.