- The White House is reportedly preparing an executive order targeting banks that discriminate against crypto firms and conservative clients.
- This executive order to end unfair debanking practices in financial institutions is expected to drop within this week.
- The US Senate introduces the FIRM Act to prevent regulators from shutting down bank accounts for no just cause, under the guise of reputation risk concerns.
President Donald Trump is currently crafting an order to reprimand banks that marginalize crypto firms and conservative customers in their service delivery. The incoming executive order is the first major federal attempt to tackle the widespread debanking problem that had its roots in the Obama administration.
Executive Order To End Unfair Debanking Practices
The White House Order intends to address banks that discriminate against crypto firms and conservatives primarily for political reasons. However, WSJ reports that a primary area of focus is lenders that terminate client relationships for political reasons.
According to those with more intimate information on the draft, the Order “directs bank regulators” to probe whether any financial institutions have breached consumer protection laws, antitrust laws, or the Equal Credit Opportunity Act.
These statutes ensure consumer protection on various facets while also preventing unhealthy discrimination and monopoly. The antitrust laws promote fair marketplace competition by protecting consumers against harmful or monopolistic practices, while the Equal Credit Opportunity Act prevents all forms of credit discrimination.
For years, many crypto firms and creators have been starved of basic banking services, alongside select industries, companies, and individuals. This practice, which many trace to the Obama era, is otherwise known as debanking or Operating Choke Point, and has been a major challenge militating against innovation in the US.
The White House’s intervention with an Executive Order is a valuable development as it suggests that the government is taking rolling back the debanking issue as a national priority. An EO could finally provide crypto firms with the unrestricted banking access they need, which could in turn promote innovation.
FIRM Act To Prevent Regulators From Unfairly Shutting Down Bank Accounts
While the White House prepares the Order targeting banks that are deliberately blocking crypto and conservatives, lawmakers are deploying the FIRM (Financial Integrity and Regulation Management) Act, a legislation to root out the regulatory premises, including the “reputational risk” upon which the debanking problem is based.
“Unelected bureaucrats shouldn’t pick winners and losers based on their political preferences. The FIRM Act stops regulators from abusing “reputational risk” to cut off financial services to law-abiding Americans and businesses,” said Senate Banking Committee Chair Tim Scott.
The “reputation risk” was a prominent element of Operation Choke Point by the Obama government’s Department of Justice, which essentially gave regulators the unreserved authority to flag bank accounts that they felt posed a reputational risk to banks.
However, lawmakers found that “woke regulators” weaponized this authority to debank customers they did not like for political, religious, and other reasons. While reputation risk has been rescinded in relevant agencies in this administration, the FIRM Act seeks to codify its redaction such that subsequent administrations won’t easily resurrect the illegitimate account closures.
In essence, the bill wants to balance authority between banks and regulators by reforming all policies that empower regulators to demand account closures at will, thus advancing the innovation and prosperity of American citizens and businesses.
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