Summary
- A new report details how nine major U.S. banks debanked businesses and individuals for political reasons.
- It started with the Obama administration’s Operation Choke Point.
- This article details how regulators were able to make this happen with merely the suggestion.
In Washington, power is most potent when it’s least visible. A statute can be read, a regulation challenged, an order defied in court. But a regulator’s arched eyebrow leaves no paper trail, invites no judicial review, and is, for a bank that must face the same examiners year after year, every bit as persuasive as a subpoena.
The eyebrow has finally entered the record.
On Oct. 14, the Office of the Comptroller of the Currency released its findings from a review of the nine largest national banks it supervises: JPMorgan Chase, Bank of America, Citibank, Wells Fargo, U.S. Bank, Capital One, PNC, TD, and BMO. Examiners sifted through nearly 100,000 complaints and some 50,000 documents.
Their conclusion: Between 2020 and September 2025, all nine maintained policies under which Americans could be denied banking services because of their political opinions, their religious convictions, or their lawful but unfashionable lines of work. Oil and gas, coal, firearms, tobacco, private detention facilities, digital assets: Each, at one bank or another, found the door narrowing.
Among the report’s particulars is a payment processor that closed the account of a seller of MAGA merchandise. Comptroller Jonathan Gould called the evidence “irrefutable.”
The report is not a verdict. No fines have been levied. The Office of the Comptroller of the Currency concedes it can’t quantify the full extent of the practice or its cost to customers, and the banks say they have since reformed how they weigh “reputation.” The Consumer Financial Protection Bureau has opened its own inquiry, so this is the beginning of a regulatory response, not its end.
But the report settles one argument and starts another. Whether debanking exists is no longer a fit subject for debate. How widespread it was, and what should be done, is.
For understanding how we got here, much of the credit belongs to Todd Zywicki, a law professor at George Mason University’s Antonin Scalia Law School and former chair of the Consumer Financial Protection Bureau’s Taskforce on Federal Consumer Financial Law. For years, Zywicki has been explaining, patiently and to an often-incurious audience, what the Office of the Comptroller of the Currency report now documents.
The history below is his; the rest of us are catching up.
It begins, as regulatory mischief often does, with the Obama administration. In 2012 and 2013, the Obama administration’s Justice Department and bank regulators launched Operation Choke Point, ostensibly to fight fraud. In practice, Zywicki argues, it leaned on banks to drop customers who were breaking no law: payday lenders, gun dealers, tobacco sellers, and others whose offense was being unloved in certain precincts.
The government rarely issued orders. It hardly needed to. Regulators had only to suggest that a customer posed “reputational risk,” and banks, which live at the sufferance of their supervisors, drew the obvious conclusion. This was regulation by “raised eyebrow” (Zywicki’s term, not mine). A business might be perfectly legal and still find itself treated as untouchable.
The Trump administration shut down Choke Point in 2017. But, Zywicki observes, the instrument outlived the operation. “Reputational risk” remained in the examiner’s toolkit until regulators began abandoning it in 2025. The program ended; the incentives did not.
Then, in Zywicki’s telling, the target moved from what customers did to what they believed. He and others catalog the examples: accounts tied to Donald Trump and Michael Flynn; the National Committee for Religious Freedom, led by former Kansas Gov. Sam Brownback, whose Chase account was closed shortly after it was opened; Indigenous Advance Ministries, which serves orphans and widows in Uganda and was dropped by Bank of America in 2023.
During the Biden years, critics detected a sequel, “Operation Choke Point 2.0,” in pressure on fossil fuels, firearms, and cryptocurrency. The banks deny that faith or politics drove any decision, and in particular cases, perhaps they did not. The difficulty is that a standard as elastic as “reputational risk” can justify almost anything, which means it can conceal almost anything. If the rules are vague enough, almost anyone can become a reputational risk.
Here someone will interject, as someone always does, that banks are private businesses entitled to choose their customers. Zywicki’s rejoinder is the heart of his case: That would be true, he says, in a genuine free market, but banking isn’t one. Banks operate under government charters, shelter behind federal deposit insurance, and enjoy privileged access to the Federal Reserve and the payments system. Their regulators, in turn, hold enormous power over them. When regulators hint, banks listen.
Meanwhile, competition, the market’s usual remedy for a merchant who turns customers away, is thin. Starting a bank is arduous, and only a handful of institutions dominate; the nine the report examined hold a majority of the nation’s commercial banking assets supervised by the Office of the Comptroller of the Currency.
Government has thus manufactured both the leverage and the concentration. It supplies the pressure and narrows the escape routes. A shopper refused by one grocer crosses the street. A business refused by every major bank may find there is no street to cross.
And banking is not a luxury. Paychecks, bills, payroll, savings, investment: Modern life runs through the financial system, which is why, Zywicki argues, banks have come to function partly as utilities. His conclusion is as compact as it is consequential: Economic freedom requires access to the financial system. A citizen who cannot bank is not quite a full participant in the commercial republic.
The Office of the Comptroller of the Currency deserves credit for doing what regulators seldom do: auditing the consequences of the regulatory state’s own handiwork. But a report, however thorough, is a snapshot, and the conditions it describes took decades to build.
“Reputational risk” may have been struck from the examination manuals, but the habits it bred will be harder to strike. Comptrollers come and go; good intentions leave office with them. The durable remedy is a rule, written by Congress, that does not depend on the forbearance of whoever holds the office. Until then, the eyebrow has been lowered, but nothing prevents its being raised again.
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[ H/T The Daily Signal ]
