ICYMI: House Financial Services Committee Releases Report on Debanking, Underscoring Need for Reform

 “This report is the latest proof point showing how politically motivated regulators utilized vague laws to pick winners and losers in our financial system.”

In case you missed it, the U.S. House Financial Services Committee this week issued a new report detailing how politically motivated, Biden-era regulators took advantage of outdated, vague laws to cut off lawful American customers and businesses’ access to financial services.

The report argues that regulators under the Biden and Obama Administrations used supervisory pressure and vague guidance to discourage banks from serving customers in certain industries such those in cryptocurrency sector, creating what is widely known as “Operation Choke Point 2.0.” As the report says, “The Biden Administration failed to establish a clear, functional digital asset regulatory regime… The financial regulators exerted informal pressure and issued guidance documents to discourage financial institutions from providing services to digital asset firms.”

The report also noted progress to address government-driven debanking, saying “The Trump Administration is charting a new path for digital assets by pursuing straightforward, commonsense regulation and ending debanking. Importantly, Trump Administration financial regulators have rescinded numerous Biden-era guidance, supervision and regulation letters, interpretive letters, and rules that fostered the debanking of the digital asset ecosystem by certain regulators.”

On the report, Americans for Free Markets (AFFM) Executive Director David Ibsen, said:

“This report is the latest proof point showing how politically motivated regulators utilized vague laws to pick winners and losers in our financial system. The findings track closely with concerns consistently expressed by AFFM, including politicized oversight, unclear rules and regulatory pressure that drove banks to distance themselves from businesses in the crypto economy.

“AFFM is also encouraged by recently proposed solutions put forward to stop government overreach in the financial sector. The FIRM Act and the STREAMLINE Act would help roll back the excessive subjectivity and outdated rules that allowed debanking to take root. Additionally, the Ensuring Fair Access in Banking for All Act proposes additional key provisions that would make clear that access to basic financial services shouldn’t be contingent on personal ideological viewpoints.

“President Trump set the tone for additional reform with his executive order, which directs federal agencies to ensure fair access to banking services for all Americans. It set the tone for restoring consistency, predictability and transparency for due process across the financial system and – importantly – gets big government out of the way.

“AFFM looks forward to working with Congress and the Trump Administration to turn these proposals into lasting protections that ensure every lawful American business is treated fairly.”

Following the report’s release, the Financial Services Committee held a hearing where members of Congress and federal witnesses underscored its key findings, reflected in the remarks below.

Comptroller of the Currency Johnathan Gould

“No American should be denied access to banking products and services because of political or religious beliefs or lawful business activity. We are currently implementing the president’s executive order on guaranteeing fair banking for all Americans by reviewing the activities of the largest national banks and investigating complaints of alleged debanking.

“We have already proposed a rule to eliminate reputation risk from supervision, and we are intent on ensuring banks provide access to products and services based on objective risk-based criteria, not politics or ideology.”

U.S. Representative Warren Davidson (R-OH)

“America’s financial institution and our system thrives when regulators stick to safety and soundness, not targeting political rivals or picking winners or losers in the marketplace, weaponizing the laws, and frankly, the lack of laws in our government.

“Under the Biden administration, we saw Operation Choke Point 2.0 resurrected from the Obama Administration where Choke Point 1.0 we saw in full swing. Regulators were weaponizing “reputational risk” to bully banks and to debanking political rivals, crypto innovators, stable coin pioneers and everyday folks just trying to build a future. It wasn’t about risk. It was about control.”

U.S. Representative Brad Sherman (D-CA)

“It’s one thing for a private individual to decide they want to boycott this or that entity or and the Supreme Court seems to think that even corporations have first amendment rights, but when the government presses a bank not to provide transactions accounts to a legal business …. that’s when government is going way too far.”

Read the full committee report HERE.