Compliance Journal September 2025
Special Focus Debanking Executive Order and Agency Actions In early August, President Trump issued Executive Order 14331 titled, Guaranteeing Fair Banking For All Americans. Among other identified purposes, the Order states that: “Bank regulators have used supervisory scrutiny and other influence over regulated banks to direct or otherwise encourage politicized or unlawful debanking activities.” The Order defines “politicized or unlawful debanking” as any act by a financial institution to directly or indirectly restrict access to, or modify the conditions of, accounts, loans, or other banking services on the basis of a customer’s political or religious beliefs, or based on lawful business activities disfavored by the institution for political reasons. Fair lending and related laws have existed for decades, and bankers have followed those laws throughout time. As a result, the Order is codifying or clarifying current law. That said, banks are encouraged to review recent account closures, loan application denials, and customer complaints to ensure no violation of the Order. The following is a summary of the Order and agency actions in response to the Order, including expectations of the Small Business Administration (SBA) of its program lenders. Recommended actions are also included. Executive Order The Order directs the federal banking supervisory agencies to take various actions to implement intent, including removing reputational risk or equivalent concepts from guidance documents, manuals, and other materials used to regulate or examine banks. The removal of such concepts must also be made clear to examiners. The agencies are also to conduct a review to identify banks that have had any past or current, formal or informal, policies or practices that require, encourage, or otherwise influence the bank to engage in politicized or unlawful debanking and to take appropriate remedial action. Such review includes unlawful banking on the basis of religion. The Order also directs SBA to give notice to banks with which it guarantees loans under SBA lending programs requiring each to (a) identify and reinstate any previous customers of the bank or its subsidiaries that were denied service through politicized or unlawful debanking action; (b) identify any potential customers denied access to financial services provided by the bank or its subsidiaries; and (c) identify any potential customers denied access to payment processing services provided by the bank or its subsidiaries. The bank is to provide notice to each identified party of the denied access and of reinstatement or renewed option to engage in services previously denied. Banking Agencies Actions The Board of Governors of the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) have each taken steps regarding reputational risk. OCC was the first banking supervisory agency to act with an announcement in March that it would no longer examine its regulated banks for reputational risk and that references to the risk were being removed from its Comptroller’s Handbook booklets and guidance issuances. In early September, OCC then announced how it considers politicized or unlawful debanking in bank licensing filings and in banks’ records of performance under the Community Reinvestment Act (CRA). OCC also issued a reminder to its banks of privacy-related rules that banks need to comply with to protect customers’ financial information under the Right to Financial Privacy Act and Bank Secrecy Act suspicious activity reports (SARs).