The FDIC to vote on a new debanking proposal as Trump criticizes practice

The Federal Deposit Insurance Corp. is expected to unveil a proposal next week to prohibit officials from forcing bank lenders to close customers’ accounts on political, social, cultural or religious grounds, according to a Bloomberg report.

This rule would focus on the government’s supervision powers, targeting how officials scrutinize banks’ risk as President Trump has repeatedly criticized the practice of depriving some individuals and businesses of banking services, known as debanking.

Trump has also said that bank giants such as JPMorgan Chase & Co. (JPM) and Bank of America (BAC) refused his money based on ideological grounds.

Trump signed the Guaranteeing Fair Banking for All Americans (the Executive Order or Debanking Order) executive order, which seeks to scrutinize bank practices related to debanking in order to address this practice “on the basis of political or religious beliefs or lawful business activities.”

This proposal will not require banks to assume any additional burdens.

The Office of the Comptroller of the Currency (or OCC) is to vote next week to propose a measure to ban the use of reputation risk – the idea that a bank’s negative public perception, such as misconduct events, poor service, or data breaches, can erode trust and negatively impact the bank’s business.

Both the FDIC and the OCC have inquired big banks if they had closed customer accounts or denied people service on political or religious grounds, according to the report.

Top banks: JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), Morgan Stanley (MS), Goldman Sachs (GS), U.S. Bancorp (USB)