On December 10, the Office of the Comptroller of the Currency (OCC) released preliminary findings from its supervisory review of “debanking” activities at the nine largest national banks. The objective of the review was to determine whether the banks debanked or discriminated against any customers or potential customers on the basis of their political or religious beliefs or lawful business activities. The review, which was required to be completed by the OCC and other federal banking agencies by December 5 pursuant to Executive Order 14331 (Guaranteeing Fair Banking for All Americans), covers the period 2020–2025.
According to the OCC, between 2020 and 2023, the nine banks made “inappropriate distinctions” among customers in the provision of financial services on the basis of their lawful business activities by maintaining public and nonpublic policies that restricted access to banking services for certain industry sectors or required escalated reviews and approvals before providing services. The agency states that, in many cases, rationales cited went beyond core financial risks to include reputational considerations (for example, “activities that, while not illegal, are contrary to [the bank’s] values” or sectors with “heightened media, activist, or political scrutiny”).
The OCC identified the following sectors as subject to restricted access or heightened review at various banks: (1) oil and gas exploration, development, or production in the Arctic; (2) coal mining or coal‑powered plants; (3) firearms manufacturing, accessories, and retail sales; (4) private prisons (including immigrant detention); (5) payday and payroll lending, consumer debt collection, repossession agencies, and related high‑interest lending; (6) tobacco and e‑cigarette manufacturing, distribution, and online retail; (7) adult entertainment; (8) political action committees and political parties; and (9) digital asset activities (issuers, exchanges, administrators). The OCC also notes that some bank policies triggered heightened reviews for individual customers based on negative media coverage or controversies (for example, demonstrations or labor disputes).
The scope of the OCC’s review includes an ongoing review of approximately 100,000 consumer complaints, both internal to the OCC and from other sources, to identify instances of political or religious “debanking.” The OCC says it is also seeking to identify whether banks coordinated with federal law enforcement to surveil and share private financial information related to transactions commonly associated with certain political views or affiliations.
The OCC states that it will continue its review to assess how these policies were applied in practice and their impacts on industries and the economy. The agency indicates that, at the conclusion of its review, it intends to hold banks accountable for any unlawful “debanking,” including referrals to the Attorney General for any violations of the Equal Credit Opportunity Act based on religion, as required by Executive Order 14331.
Our Take
The OCC is the first federal banking agency to publicly announce completion of its supervisory review of debanking practices for the nine largest banks. Following the agency’s review of complaints. we assume the agency will issue a final report that includes results for all OCC- supervised institutions. Presumably, the other federal banking agencies will soon follow with their own debanking supervisory review reports. We also expect this line of inquiry to spread from the largest banks to other banks as time goes forward.
It is notable that the OCC did not delve into the role that it and other federal agencies may have played under previous administrations in pressuring banks to limit access to banking services for certain industries, instead pointing to actions the agency has taken in recent months to remove reputational risk from bank supervision and examination guidance and to provide consumers with information about how to file complaints.
Although it remains to be seen whether the federal banking agencies will take any nonpublic or public actions against supervised financial institutions where alleged debanking activities are identified, the OCC’s preliminary findings are likely the tip of the iceberg. We will continue to monitor and report on any developments concerning the outcomes of the federal banking agencies’ debanking supervisory review.