There are plenty of reasons to be critical of the big banks. They hit customers with illegitimate fees. They misuse personal information. They pay meager interest on savings accounts. They do too little to help struggling mortgage holders. Some such as Wells Fargo have a history of creating bogus accounts to generate revenue. Many have been accused of manipulating foreign exchange markets, enabling tax evasion by the wealthy, and helping bring the U.S. economy to the brink of collapse in the late 2000s.
In Violation Tracker, Bank of America has by far the largest cumulative penalty total: $87 billion. JPMorgan Chase is second with $40 billion; Wells Fargo and Citigroup are also among the ten most penalized corporations.
Apparently oblivious to all this, Donald Trump recently launched a tirade against the banks that focused on a bizarre accusation: that they refuse to do business with people with right-wing political views, especially Trump himself.
In an interview with CNBC, Trump claimed that JPMorgan Chase and Bank of America had refused to accept deposits from his company after his first term as president. “The Banks discriminated against me very badly,” he moaned.
Trump’s account may very well have been fictional. If not, it conveniently ignores the idea that the banks may have shunned him because he was a bad credit risk, and for a period of time after January 6 there was a chance he would end up in prison.
Aside from his personal grievances, Trump’s comments appear to be connected to a move by his administration to address what right-wingers claim is a practice of “debanking” – denying banking services to people based on their political views. There is, of course, no evidence that banks apply an ideological litmus test to potential customers.
Instead, the debanking assault seems to be an effort to undermine rules governing transactions with individuals who might be connected to illegal activities such as money laundering and the financing of terrorist activities. As part of their due diligence, banks are supposed to consult lists of people who may be tied to such activities.
During the Obama and Biden Administrations there were also efforts to discourage banks from doing business with crooked operators in areas such as payday lending and cryptocurrencies. These efforts, known as Operation Choke Point, have come under frequent criticism from MAGA world.
The banks themselves would like to weaken their due diligence obligations. That probably explains why they chose not to scoff at Trump’s criticism. A JPMorgan spokesperson said: “We agree with President Trump that regulatory change is desperately needed.”
If anything, the regulations governing bank practices need to be more stringent. All too often, financial institutions are found to be deficient in their anti-money-laundering efforts. U.S. and foreign banks have paid out billions of dollars in fines and settlements to resolve cases brought by federal and state regulators.
Big banks have also been accused of doing business with disreputable individuals such as one very much in the news these days: the late Jeffrey Epstein. In 2023 JPMorgan Chase paid $290 million to settle a lawsuit brought by victims of Epstein who alleged that the bank turned a blind eye to indications of his sex trafficking because he was such a lucrative client.
If debanking means that financial services are denied to the likes of Jeffrey Epstein, I’m all for it.