ICYMI: Former U.S. Senator Pat Toomey Weighs in on ‘Debanking’ Crisis

“It’s totally unacceptable for banking regulators to exercise authorities they don’t have.”

In case you missed it, Americans for Free Markets advisor and former U.S. Senator Pat Toomey (R-PA) joined the Banking with Interest podcast to discuss the reemerging topic of ‘debanking’— the notion that a financial institution may close accounts based on religious or political factors. Toomey, who served as Ranking Member of the U.S. Senate Banking Committee, has been a vocal critic of debanking and an advocate for clear, consistent regulations to help address the issue.

During the interview, Toomey explained how debanking flourished under Democratic administrations over the last decade and how unelected, unaccountable regulators are thumbing the scale and committing blatant government overreach, saying, “There are a lot of folks on the left who believe this is a very good thing, that the financial regulators should try to steer the economy…. Policy should be enacted by people who are accountable… Unaccountable regulators who do what they want is the anthesis of a democratic society.”

He went on to remark on the irrationality of debanking and accusations that financial institutions are targeting conservatives, noting, “I would be shocked if there is a significant bank anywhere in America that is systematically choosing to forego doing business with half of America. Right? It’s so irrational… I don’t think it’s happening.

The former senator proceeded to explain the massive pressures placed on banks to file Suspicious Activity Reports (SARs) to protect themselves from hefty federal penalties and fines, stating, “It’s probably because the banks have huge obligations. There are complex, very extensive, regulations…. There are people who can hold up their hands and say, ‘hey, I’m a conservative and my bank just closed my account.’ Well, those two facts may they both be true, but there’s not a cause and effect there.”

Toomey then offered solutions to satisfy regulators, banks and consumers alike on the debanking issue, suggesting promoting accountability and transparency would be key, “You have got to figure out how to make the regulators accountable and have more transparency…. If the regulators were required to put more in writing and to save their files and they would know what subject is being subpoenaed, and so they’d be careful.”

On raising the threshold for a SARs filing, Toomey said, “the vast overwhelming majority are completely innocuous, and yet everybody has to go through the hassle of producing these things all the time. We would be much better off if we raised the threshold.”

When discussing the proposed Fair Access legislation at the state and federal levels—which would essentially force banks into doing business with certain customers or not doing business with others—Toomey pushed back declaring he’s “not comfortable with that at all” and continues stating, “I don’t want to put that decision in the hands of government. I think you’ve got to leave that discretion to banks.”

To listen to the full podcast on Banking with Interest, click HERE.

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