November 21, 2025

Vo. XLII, No. 10

Debanking Executive Order

I. Introduction
On August 7, 2025, President Donald Trump issued an Executive Order entitled "Guaranteeing Fair Banking for all Americans" (EO). The EO broadly prohibits banks and other financial institutions from engaging in "politicized or unlawful debanking" - essentially, from restricting or denying credit, deposit, or other financial services to customers and potential customers based on "political or religious beliefs or lawful business activities." It also instructs the federal banking regulators to remove from their supervisory guidance and other materials reputational risk and similar concepts that could cause politicized or unlawful debanking.

The EO states that US consumers and businesses should not be denied access to financial services based on their political or religious beliefs or lawful business activities, many of which are constitutionally or statutorily protected. The EO directs the federal banking regulators to eliminate politicized or unlawful banking practices. Financial services broadly includes loans, deposit accounts (including access to them and their terms and conditions), and "other banking products or financial services."

II. Banking Regulator Review of Supervised Financial Institutions' Debanking Practices
Significantly, following the EO, financial institutions could face enforcement actions, and even civil liability, if the federal banking regulators or DOJ determine that they have engaged in political or unlawful debanking practices - whether such practices are informal or formal and whether they have occurred before or may occur after the EO's issuance. The federal banking regulators are directed, within 180 days of the EO, to identify financial institutions subject to their respective jurisdictions that have engaged in such practices in violation of applicable law.

​Laws expressly included under the EO are: (1) Section 5 of the Federal Trade Commission Act, which prohibits "unfair or deceptive acts or practices in or affecting commerce;" (2) Section 1031 of the Consumer Financial Protection Act, which prohibits unfair, deceptive, or abusive acts or practices in connection with consumer financial products and services; and (3) the Equal Credit Opportunity Act (ECOA). To the extent the federal banking regulators determine that any supervised financial institution has violated these or other applicable laws by having committed any political or unlawful debanking practices, such regulators are instructed to take appropriate remedial action. This includes "levying fines, issuing consent decrees, or imposing other disciplinary measures."

Special action is required with respect to any unlawful debanking practice taken "on the basis of religion." Within 180 days of the date of the EO, the federal banking regulators are charged with determining whether such conduct by any financial institution has occurred. Those financial institutions having engaged in unlawful debanking on the basis of religion are required to comply with the relevant portions of ECOA. If they fail to do so, the relevant federal banking regulator is instructed to refer the matter of noncompliance to the Attorney General "for appropriate civil action."

III. Removal of Reputation Risk for Federal Banking Regulator Use
The EO strikes reputation risk as a distinct category of risk assessed by federal banking regulators. The EO instructs regulators to remove, within 180 days of the date of the EO, all references in guidance, supervisory manuals, and other materials - other than existing regulations - to reputation risk (or similar concepts) that could result in political or unlawful debanking.

The Federal Reserve and OCC had, prior to the EO, issued guidance removing reputation risk as a category of risks to be managed by supervised institutions and instructing bank examiners to no longer examine reputation risk.

The federal banking regulators are required to consider rescinding or changing existing regulations that could result in debanking so that reputation is considered "solely to the extent necessary to reach a reasonable and apolitical risk-based assessment."

The EO refers to financial services restrictions placed because of a "customer's political or religious beliefs ... or lawful business activities that the financial service provider disagrees with or disfavors," again, on "political" grounds. Debanking actions by financial institutions taken for other reasons, such as adverse market impact or unfavorable media attention, could arguably exist in a gray zone, potentially presenting compliance challenges. The EO does, however, define appropriate and permissible criteria for decision-making on banking and financial products, namely "individualized, objective, risk-based standards."

IV. SBA Review of Loan Guarantee Programs for Small Businesses - Remediation by Participating Financial Institutions
 The EO includes several requirements for the SBA, which is charged by statute with overseeing various loan and other financial assistance programs for qualifying small businesses. Within 60 days of the date of the EO, the SBA must notify all financial institutions for which it "guarantees loans under its lending programs" that these institutions are to:

• a. Make reasonable efforts to identify and reinstate within 120 days of the date of the EO any previous clients (including their subsidiaries) denied service through a politicized or unlawful debanking practice in violation of the SBA's lending statute or its policies or procedures relating to its Office of Capital Access - and notify any victims of reinstatement - and
• b. Identify within 120 days of the date of the EO all potential clients (including subsidiaries) denied access either to financial services or payment processing services through politicized or unlawful debanking practices similarly in violation of the SBA's relevant authorities and notifying them of such denied services, together with the "renewed option to engage in such services previously denied."

V. Treasury Actions
The EO also directs the Treasury Secretary, in consultation with the Assistant to the President for Economic Policy, to develop within 180 days of the date of the EO a comprehensive strategy to combat political or unlawful debanking by both financial regulators and financial institutions. The required strategy must consider any legislation or regulations to achieve this objective.

VI. OCC Bulletins - Debanking
The OCC has issued two bulletins aimed at eliminating "politicized or unlawful debanking" by the banks it supervises, consistent with President Trump's EO.

The first bulletin reminds banks that debanking activities may be considered in reviews of Community Reinvestment Act (CRA) performance and licensing filings for corporate activities, such as opening new branches or completing mergers and acquisitions. The second reminds banks of their legal obligations regarding the released of customer financial records and the voluntary submission of suspicious activity reports (SARs).

a) Right to financial privacy (RFPA)
Under the RFPA, banks may not disclose customers' financial records to a government authority unless the government follows specific procedures. Generally, to obtain the records, a government authority must certify in writing that it has complied with the RFPA by obtaining either customer authorization; an administrative subpoena or summons; a judicial subpoena, a search warrant; or a formal written request from a government agency if no administrative summons or subpoena authority is available (and follow other obligations as set out in the RFPA). The OCC reminds banks that the proper processes must be followed before disclosing customers' financial information, even if the information is requested by the government.

b) Voluntary SARs
The bulletin reminds banks that while they voluntarily may file a SAR with respect to any suspicious transaction they believe is relevant to a possible violation of law or regulation but that is not required to be filed under FinCEN rules, banks should not utilize voluntary SARs as a "pretext" to improperly disclose customers' financial information or evade compliance with the RFPA. A bank should only submit a voluntary SAR "where it identifies concrete suspicious activity, such as activity that could form the basis for filing a SAR except that it is under the applicable threshold."

c) OCC bulletin on CRA reviews
The second bulletin states that the OCC may consider "politicized or unlawful debanking" in bank licensing applications and CRA performance reviews.

d) Licensing filings
The OCC considers certain "evaluative factors" in reviews of licensing filings by banks seeking bank branches, changes in control or other corporate activities, or by entities looking to obtain a federal charter or license. Debanking activity by banks may implicate certain of these factors, such as "the convenience and needs of the community to be served, fair access to financial services, fair treatment of customers, and the transaction's impact on depositors, other creditors, and customers." The OCC notes that during its licensing reviews, it may consider a bank's record of politicized or unlawful debanking and its policies and procedures designed to avoid engaging in debanking.

VII. Small Business Administration - Debanking Practices
The U.S. Small Business Administration (SBA) took action to enforce President Trump's EO by issuing a letter to its network of over 5,000 lenders. This letter mandates the cessation of alleged politicized or unlawful banking practices, requiring lenders to reinstate qualified customers who were wrongfully denied access to financial services based on political, religious, or ideological beliefs.

The SBA letter requires lenders to take several actions by December 5, 2025, to end debanking practices:

• Identify Debanking Practices: Lenders must identify any past or current formal or informal policies or practices that require, encourage, or influence their institution to engage in politicized or unlawful debanking.
• Reinstate Wrongfully Denied Clients: Lenders are instructed to make reasonable efforts to identify and reinstate previous clients denied service through politicized or unlawful debanking actions in violation of statutory or regulatory requirements.
• Notify Affected Potential Clients: Lenders must provide notice to potential clients who were denied access to financial services or payment processing services, advising them of the renewed option to engage in services previously denied.
• Report Compliance: Lenders must submit a report to the SBA by January 5, 2026, evidencing their compliance with these directives to remain in good standing with the agency and avoid punitive measures.

Subsequent to the issuance of the SBA letter, the SBA provided further clarification regarding the manner in which an institution that has less than $30,000,000,000 in total assets as of June 30, 2025, and is supervised by any of the Federal banking regulators, may comply with the SBA's reporting requirements set forth in the SBA letter. The SBA has provided that by using the following form and meeting the criteria set forth therein, an institution can demonstrate compliance with the reporting requirements of the SBA letter.

Full-Text PDF

---

The foregoing Compliance Update is for informational purposes only and does not constitute legal advice. As a reminder, the NBA general counsel is the attorney for the Nebraska Bankers Association, not its member banks. The general counsel is available to assist members with finding resources to help answer their questions. However, for specific legal advice about specific situations, members must consult and retain their own attorney.