ICYMI: President Trump Highlights Role of Rogue Regulators in “Debanking”

President Trump last week highlighted the power of unelected bureaucrats in pressuring banks to close accounts – or avoid opening accounts altogether. Citing Biden-era regulators who weaponized vague rules and regulations to advance their own political agendas, the President said, “The regulators control the banks.” He went on:

“The president of the bank is far less important to a bank than a regulator and a regulator can put that bank out of business.”

This kind of politically-driven regulatory pressure is at the heart of concerns around debanking. For years, these federal regulators have used ambiguous regulatory standards to direct the flow of capital at the expense of the free market. As AFFM has said time and time again, “Banks, not bureaucrats, should be the ones deciding how to conduct their business.”

Fortunately, President Trump has an opportunity to rein in these federal regulators, reverse harmful Biden-era policies and restore transparency and economic freedom in the financial sector. Just last week, the Federal Reserve Board announced it will no longer consider reputation risk in its supervision of banks. This follows recent and similar actions to remove reputation risk components by the Office of the Comptroller of Currency (OCC) and Federal Deposit Insurance Corporation (FDIC).

At the same time, Congress has been making important strides too. Chairman Tim Scott’s bill — the Financial Integrity and Regulation Management (FIRM) Act — and its companion legislation under the same name in the House, introduced by Representatives Andy Barr and Ritchie Torres are designed to get politics out of the free market and help ensure a stable, strong financial sector while growing the economy. But more must be done to help prevent future administrations from abusing their authority through the banking system. As AFFM advisor and former U.S. Senator wrote in Newsweek:

“Enacting these bills is important because, absent clear legislative guardrails, future administrations could simply reverse agency guidance with the stroke of a pen, reintroducing instability and politicization into the financial system…

“Lawmakers should [also] focus on enacting needed reforms to the current [Bank Secrecy Act] and anti-money laundering (AML) framework as well as updating the threshold for filing SARs to modernize and better protect the banking system and serve American businesses and taxpayers.”

Sen. Toomey went on:

“A depoliticized financial sector is vital not only to protect individual industries, but to uphold broader American principles of free enterprise, innovation, and opportunity. Lawmakers must continue to capitalize on the momentum to rid our financial service systems from politicized regulations and instead focus on policies that ensure sound, unambiguous regulations free from political bias that don’t overregulate the free market.”

See a video of President Trump’s response below:

Read more about AFFM’s support of the FIRM Act HERE and HERE.

Read more about what AFFM members have to say on the legislation HERE.