The America First Policy Institute’s Center for American Prosperity is calling for major reforms to combat government-driven “debanking.”
On Wednesday, the conservative think tank released a new report titled “Debanked: When Political Bias Trumps Financial Judgment.” The report outlines a series of policy proposals aimed at limiting the federal government’s influence over banks and protecting individuals and organizations from being denied banking access due to their political beliefs.
Jill Homan, Deputy Director of Trade and Economic Policy, and David Vasquez, Senior Policy Analyst for Energy & Environment at AFPI, co-authored the report. They argue that debanking “creates a de facto blacklist of people and organizations that have lost access to banking services and have significant difficulty regaining access to banking.”
“Debanking creates uncertainty and hardship,” the authors wrote. “In a nation governed by laws, the practice of legal coercion through regulatory discretion is antithetical to the American system of justice.”
They further stated, “Ultimately, debanking is not just an economic problem, but a constitutional one. When federal officials use unofficial ‘guidance’ to achieve what Congress never authorized, they violate both the spirit and letter of the law. The solution is to excise power from the regulators, and that begins with narrowing their discretion.”
The practice of debanking gained national attention during the Obama administration with the launch of “Operation Choke Point,” a Justice Department initiative that was officially intended to target businesses suspected of fraud or money laundering. The operation was expanded under the Biden administration with “Operation Choke Point 2.0.” Critics have said these programs, despite their alleged intention, have led to pressure on banks to sever ties with legitimate but politically disfavored industries such as firearms dealers and religious groups.
Earlier this summer, President Donald Trump weighed in on the issue.
“The regulators control the banks,” Trump said in June, according to The Daily Wire. “It’s not the president of the bank. The president of the bank is far less important to a bank than a regulator, and a regulator can put that bank out of business.”
AFPI’s report calls on Congress to pass the Financial Integrity and Regulation Management Act, which would eliminate regulators’ use of “reputational risk” as a reason to restrict a bank’s operations. Instead, banks would be evaluated using only objective financial criteria.
The group also recommends creating a uniform “Federal Fair Access” that would “end the need for states to develop separate debanking legislation that further complicates banking operations with a patchwork of inconsistent and conflicting state laws.”
“Whether the result of politically driven regulators abusing their authority or bad policies, this administration and Congress have an opportunity to dramatically curb the practice of government-driven debanking across the country through federal action,” the report concluded.
