By Pete Schroeder
WASHINGTON (Reuters) – U.S. banks and their regulators will be on the hot seat on Wednesday, as lawmakers explore claims from conservatives and some companies that they deny services to particular industries or political groups.
The Senate Banking Committee will hold a hearing on what is commonly referred to as debanking, hearing testimony from subject matter experts and business owners who claim they were unfairly denied access to banking products.
The banking industry has fiercely resisted accusations that it denies services based on ideological reasons. It has instead argued that onerous and opaque rules and bank supervisory practices make it difficult for banks to sometimes provide services, or explain why they cannot.
Wednesday’s hearing may indicate what policy responses could be in the works, including potential new rules or legislation establishing a national standard for providing banking services.
“This hearing is the beginning of the committee’s work to end this practice and will serve as an opportunity to hear directly from witnesses relating to their experience being debanked, which will in turn help shape solutions to address it – including holding regulators and financial institutions who exploit their power accountable,” said a spokesperson for Senator Tim Scott, the panel’s Republican chairman.
Witnesses set to testify include the head of Anchorage Digital, a crypto platform that claims to have been debanked, and Old Glory Bank, a bank established in 2022 that specifically brands itself as a response to debanking complaints about larger lenders.
Republican-led states have pushed legislation to discourage perceived discrimination by banks, and the patchwork of varying laws meant to ensure banks lend fairly has led to frustration in the industry.
The lingering dispute drew headlines in January, when President Donald Trump accused the CEOs of Bank of America and JPMorgan Chase of not providing banking services to some conservatives, echoing complaints of “woke capitalism.”
The banks responded by saying they do not refuse services on political grounds. The industry is prepping a fresh push for clearer rules, arguing for a clear national standard on fair access to financial services, clarity around anti-money laundering laws that can force banks to close accounts, and streamlined bank supervision to help firms better understand who they can provide services.
“We believe only federal legislation can provide clarity and protection. Federal law also can preempt conflicting state laws, which would be a positive for banks,” wrote Jaret Seiberg, an analyst with TD Cowen, in a note.
(Reporting by Pete Schroeder; Editing by Rod Nickel)
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